NIE 2023 | ZeroCloud Zhu Chen: Promoting the Localization of Industrial Software and Crafting the Soul of a Manufacturing Power

Zhu Chen pointed out that in terms of the industrial software market size, it is estimated that the global industrial software product market size will reach 3516.1 billion yuan in 2023, with China's market size being 276.4 billion yuan, accounting for only 7.9% of the global market. However, China's industrial added value accounts for nearly 30% of the global total, showing a nearly threefold gap.

Since domestic industrial software is difficult to surpass foreign counterparts in the short term, and few buyers are willing to be the first to try new things, domestic industrial software is not popular in the domestic market, with its market share accounting for less than 10% domestically. Industrial software is complex, and the industrial internet is not simply the addition of 'industry' and 'internet'. The two must be logically connected according to industrial production. Industrial software is first and foremost an 'industrial product', followed by a 'software product'.

Zhu Chen stated that the attributes of industrial products determine that industrial software is highly complex, which is not only reflected in the significant differences in industry, specialty, technology, and processes of industrial production but also in the high standards for data granularity and computational accuracy. Currently, a large number of industrial Internet enterprises are only at the level of industrial chain collaboration, with only a few focusing on the intelligent transformation of each link in manufacturing production lines. The development of domestic industrial software faces major challenges such as data collection, intelligent transformation of production lines, and the accumulation of industrial knowledge databases.

Therefore, the digital transformation of manufacturing enterprises is challenging, and the journey is quite long. Since the first survey by PwC in 2014 when enterprises began their digital transformation, 64% of the surveyed enterprises are still in the initial stages of digital transformation in 2022. Most manufacturing enterprises spend 3-5 years building dozens of information systems, investing heavily, but the final results are far from what was expected.

The main constraints on the digital transformation of manufacturing enterprises lie in three aspects: insufficient professional talent, limited capital investment, and lack of technical capabilities. This has led to pain points in digital transformation, including data silos, business silos, geographical silos, and industrial silos. Currently, the main driving force for transformation has shifted from improving production efficiency to quickly adjusting products and reducing line change times to enhance agility, as well as through standardized platform-level systems, technologies, and processes to make adjustments seamless, rapid, efficient, and effective to improve resilience.

Regarding the digital transformation of enterprises, Zhu Chen emphasized the importance of domesticating industrial software and made the following suggestions:

• Transformation requires the right organizational structure, supporting agile operational models and digital capabilities.
• Reserve scalability from the very first day of planning for change.
• Systems, processes, and connectivity need further standardization and coordination, that is, platform-level industrial software products, to support the full-scale implementation of enterprises.

• Key enabling factors such as vertically and horizontally integrated digital backbone require high investment as support, which should at least account for 3% of net revenue (the possibility of high returns is 2.5 times higher for companies that do not invest more than 2%).