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Leveraging Digital Twins for Competitive Advantage

This article explores the very concept of Digital Twins, virtual replicas that offer real-time insights and control over physical assets and processes using virtual models, IoT, and machine learning. We examine how these technologies enable businesses to optimise operations, highlighting their predictive maintenance, manufacturing, and sustainability applications. We demonstrate Digital Twins' role in driving digital transformation and operational efficiency through various sector examples.



In the heart of Europe’s renewable energy landscape, Siemens Gamesa’s wind turbines rise, epitomising the fusion of engineering prowess and environmental stewardship. These turbines, powered by the relentless force of the wind, are more than mechanical giants; they embody advanced Digital Twin technology, creating a seamless bridge between the physical and digital realms. This technology allows each turbine’s operational essence and environmental interactions to be replicated in a virtual model, enabling real-time optimisation and predictive maintenance through a meticulous application of physics and mathematics.

At the core of this technological marvel is the application of fluid dynamics, allowing Siemens engineers to simulate airflow around the turbine blades with precision. By leveraging Bernoulli’s principle, the digital twin predicts how wind speed and direction variations affect turbine efficiency, ensuring optimal energy conversion. This is complemented by using Fourier transforms for analysing vibration data from the turbines, pinpointing potential maintenance needs before they escalate, enhancing reliability and extending operational life.

Mathematically, the placement of turbines within a wind farm is optimised through algorithms that solve the Navier-Stokes equations, which describe the motion of wind as a viscous fluid across the landscape. This sophisticated approach minimises the wake effect – where turbines downstream from others experience reduced wind speed – and maximises overall energy production, striking a balance between ecological harmony and industrial efficiency.

Siemens Gamesa’s commitment to integrating Digital Twin technology signifies a leap towards the future of renewable energy. By marrying laws of physics with digital simulations, the company not only optimises the performance of each turbine but also paves the way for a sustainable energy landscape. This strategy exemplifies how leveraging digital twins can transform raw natural forces into predictable, manageable, and efficient energy outputs, showcasing a forward-thinking approach to harnessing the wind’s power.

Core Technology of Digital Twins

But what is a Digital Twin? Isn’t it just another fashionable buzzword? Definitely not:
This is both an industrial trend and an interdisciplinary research field which includes engineering, computer science, automation and control. To understand the underpinnings of digital twin technology, it’s essential to delve into the specific roles and advancements within AI, IoT, cloud computing, and machine learning. These core technologies enable digital twins’ creation, operation, and evolution, making them a sound solution in various sectors, from manufacturing to healthcare.

Core technologies of digital twin

🔹 Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML algorithms are at the heart of digital twins, enabling them to process complex data and perform predictive analytics. For instance, AI can analyse data from IoT devices to predict equipment failure, while ML algorithms can learn from historical data to improve these predictions over time. Integrating deep learning, a subset of ML, allows digital twins to recognise patterns and anomalies in data, facilitating more accurate simulations and forecasts.

🔹 Internet of Things (IoT)

IoT technology provides the sensory network that feeds real-time data into digital twins. This data can include temperature, pressure, humidity, and operational metrics from various sensors embedded in physical assets. IoT devices enable continuous monitoring and data collection, which is critical for the dynamic updating of digital twins. Advancements in IoT technology, such as increased sensor accuracy and the development of low-power wide-area networks (LPWANs), enhance the efficiency and scope of data collection for digital twins.

🔹 Cloud Services and Edge Computing

Cloud services offer the scalable computational power and storage necessary for managing the vast amounts of data generated by digital twins and IoT devices. Advancements in cloud technology, such as containerisation and serverless computing, allow for more efficient resource use and deployment of digital twin applications. Edge computing is complementary by processing data closer to its source, reducing latency, and enabling real-time analytics and decision-making for digital twins. This is particularly important for applications requiring immediate responses, such as autonomous vehicle operation or emergency services.

Digital Twin vs. Simulation: Key Differences

One might wonder why this isn’t just called a digital simulation of physical processes. Of course, there are similarities. While simulation involves modelling scenarios within defined parameters to predict outcomes, digital twinning creates a bidirectional link between the physical and digital. This link allows for real-time updates and interactions between the two, making digital twins dynamic and adaptive.

Unlike traditional simulations, digital twins evolve based on continuous data flow, ensuring they remain accurate reflections of their physical counterparts. Here is a table with a detailed comparison:

DefinitionA digital twin is a dynamic digital representation of a physical object or system updated with real-time data.A simulation is a static or dynamic model that represents the behaviour of a system under certain conditions.
Data IntegrationUtilises real-time data from IoT devices for continuous updates.Typically, uses historical data or hypothetical scenarios for analysis.
InteractionBidirectional: Changes in the physical object can update the twin, and insights from the twin can bring physical changes.Unidirectional: Changes in the model do not affect the physical object.
PurposeUsed for monitoring, diagnostics, predictive maintenance, and optimisation.Used for testing hypotheses, scenario planning, and educational purposes.
DynamicsContinuously evolves based on live data and can simulate future states.Often based on predefined parameters without real-time updates.
Computational RequirementsHigh: Requires substantial computing resources for real-time data processing and analytics.Variable: Depends on the complexity of the simulation model.
Implementation ComplexityHigh: Involves integrating IoT, AI, ML, and cloud computing technologies.Moderate to High: Depends on the simulation’s scope and detail level.
Use CasesManufacturing, healthcare, urban planning, energy management, etc.Aerospace, automotive testing, financial modelling, educational tools, etc.

Strategic Implications for Business

Incorporating digital twin technology into business strategies aligns with several economic and business theories, offering insights into operational efficiency, predictive maintenance, and accelerated innovation.

This approach is underpinned by the principles of competitive advantage and the resource-based view, highlighting the strategic importance of leveraging unique resources and capabilities.

Predictive Maintenance and Competitive Advantage

Predictive maintenance, enabled by digital twins, showcases a direct application of competitive advantage through cost savings and differentiation.

For instance, the oil and gas industry has seen significant advancements in predictive maintenance, with companies like Baker Hughes leveraging digital twins for their fleet of fracturing trucks. Analysing nearly a terabyte of data from pumps on these trucks, the company utilised signal-processing and machine-learning techniques to distinguish between healthy and unhealthy pumps, ultimately reducing costs by $10 million. This example illustrates cost leadership through reduced maintenance expenses and differentiation by enhancing reliability and service quality.

Operational Efficiency and Resource-Based View

Digital twins contribute to operational efficiency by optimising resource allocation and process workflows, turning operational infrastructure into a strategic asset. The resource-based view emphasises the importance of valuable, rare, inimitable, and non-substitutable resources and capabilities, which digital twins exemplify by providing detailed insights and analytics capabilities for superior resource utilisation.

Accelerated Innovation and Innovation Management

Digital twins also play a crucial role in accelerating the innovation cycle, allowing companies to experiment with new ideas in a virtual environment without the risks and costs associated with physical trials.

McKinsey highlights that nearly 75% of companies in advanced industries have adopted digital twin technologies, with significant variance between sectors. Automotive and aerospace industries are notably advanced in using digital twins, leveraging the technology for machine-learning-based geometry optimisation and multiphysics models for real-time wear prediction and performance optimisation. Such approach reduces development times and costs and improves product quality and customer satisfaction, aligning with Schumpeter’s notion of “creative destruction” by continuously disrupting and redefining competitive landscapes through innovation.

Integration with AI and Strategic Decision-Making

The synergy between digital twins and AI exemplifies the theory of dynamic capabilities, enhancing strategic decision-making by analysing complex data to predict trends and suggest optimisations. Digital twins, when integrated with AI, can dynamically adapt to changing environments, offering a sophisticated predictive maintenance capability that is particularly valuable in industries characterised by high-value assets and critical operations.

The list of benefits of digital twins

Implementing digital twin technology, while offering substantial benefits, comes with its own set of practical and conceptual challenges. These challenges are not merely technical hurdles but also philosophical quandaries about the nature of reality and representation, accuracy, and the limits of digital replication.

Challenges: Complexity, Data Demands, Integration and Reality

The implementation of digital twin technology, while brimming with the potential to revolutionise industries, is fraught with technical and conceptual challenges that businesses must navigate.

Bring more tech

The practical challenges of digital twin implementation start with setup complexity. Designing a digital twin requires an intricate understanding of the physical asset or system it represents, necessitating detailed modelling that can account for every relevant aspect of the physical counterpart. This complexity is not just in the initial setup but extends to maintaining the twin over time, ensuring it evolves in line with changes in the physical world.

High data demands present another significant hurdle. Digital twins require a robust foundation of data sourced from inputs such as PLCs, MES platforms, and IoT devices to replicate the physical assets they model accurately. This data must be meticulously cleaned and structured (often in real-time), placing substantial demands on IT infrastructure and necessitating robust data management strategies to handle the volume, velocity, and variety of data.

Integration challenges arise when digital twins must be incorporated into existing IT ecosystems. Many organisations have legacy systems and disparate data sources that may need to be more readily compatible with new digital twin technologies.

Achieving seamless integration requires meticulous planning and often substantial modification of existing systems, which can be time-consuming and costly. Usually, it involves the creation of a new, modular and scalable tech stack that can adapt to both evolving business needs and technological advancements. Achieving this level of integration frequently necessitates overcoming fragmented data landscapes and filling talent gaps within organisations, particularly in data engineering and systems architecture expertise.

Touching the bytes

But the main problem is much more severe: reality itself. There are conceptual challenges in data interpretation and the accuracy of digital representations. The philosophical question of whether a digital twin can genuinely encapsulate the complexities of its physical counterpart is at the heart of these challenges. While digital twins can offer highly accurate simulations, they are ultimately nothing else as formal abstractions, limited by the quality of data and the models used to interpret that data.

In all industrial deployments, digital twins operate under the assumption that physical phenomena can be sufficiently understood and modelled through data and algorithms. Yet, this assumption raises critical questions about the fidelity of digital representations, the subjectivity inherent in data interpretation, and the potential for these models to shape our understanding of the physical world they seek to replicate.

We must remember that no matter how sophisticated, these technologies are constrained by the inherent uncertainties of modelling complex systems. The assumptions and simplifications necessary to create these models mean that digital twins are always approximations, raising questions about the limits of our ability to use them as stand-ins for the real world.

Moreover, interpreting data by digital twins involves making judgements about what is significant and how it should be represented. These decisions are not value-neutral but are informed by the perspectives and biases of those who design and operate the twins. This introduces a layer of subjectivity into what might otherwise be assumed to be objective representations of reality.

Finally, the conceptual challenge of achieving an accurate digital representation of reality also questions the relationship between the physical and the digital. As we increasingly rely on digital twins for decision-making, we must ask ourselves to reconsider our reliance on digital abstractions to navigate and make decisions about the physical realm. Who will be responsible for the results of such decisions if so much depends on the model quality?

As we see, while the implementation of digital twin technology offers transformative potential across industries, it necessitates navigating a complex landscape of practical and conceptual challenges.

These challenges require technical expertise and a philosophical engagement with questions about the nature of representation, accuracy, and reality itself. As such, the journey towards fully realising the promise of digital twins is as much about advancing technology as it is about deepening our understanding of the world they aim to replicate.

The list of challenges of digital twins

Adoption of Digital Twin Technology

Despite the value and attractiveness of this technology, many obstacles stand in the way of its widespread adoption. They span both technical and organisational realms, requiring a nuanced understanding and strategic approach to overcome. We talked about technical issues before, but one problem is often overlooked.

It’s the need for digital maturity within an organisation. This need encompasses the technological infrastructure necessary to support digital twins – such as high-quality data from testing and live environments – and the talent capable of building and maintaining this infrastructure.

The foundation of digital maturity enables organisations to start simple, with digital twins of even the most basic products, and gradually add layers of complexity and functionality​.

However, technical challenges are often matched by organisational barriers. For example, the Change2Twin project emphasises that the prospect of implementing digital twins can seem daunting for many SMEs due to perceived financial and technical obstacles. Yet, organisational readiness often plays a critical role in successfully adopting digital twins. Overcoming these challenges involves recognising the importance of digitalisation and addressing the digital gap that can lead to a loss of competitiveness​.

A phased approach to adoption is recommended to navigate these barriers effectively. Initially, organisations should focus on creating a blueprint that defines the scope and sequence of digital twin implementation, ensuring that the digital twins evolve in complexity and utility over time. The next step involves building the basic digital twin, a process that can take three to six months and requires assembling a core data product for initial use cases​.

As the digital twin becomes operational, organisations can enhance their capabilities by integrating more data and advanced analytics, moving from simple asset representation to providing dynamic simulations and prescriptive insights. This evolution is facilitated by leveraging AI and advanced modelling techniques, which allow the digital twin to offer predictive capabilities and more sophisticated scenario planning​.

The journey from a basic digital twin to a comprehensive virtual universe involves interconnecting multiple digital twins to simulate complex relationships and generate deeper behavioural insights. Such a network of digital twins can simulate end-to-end impacts of process changes, optimise operational layouts, and allow for experimenting. Ultimately, it becomes a digital foundation that can replicate major aspects of business processes in an organisation, offering a sandbox for innovation and strategic decision-making.


Market Trends and Future Outlook

The prospects for growth in digital twin technology are expansive, with its application extending across numerous sectors. These include but are not limited to aerospace, agriculture, automotive, building, energy, environmental management, healthcare, industrial design, intelligent manufacturing, maritime, mining, rail systems, robotics and urban development. Especially the aerospace, automotive and transportation sectors are significant beneficiaries of digital twin technology, employing it for vehicle design, operation, and maintenance improvements. There’s no wonder that the global digital twin market is expected to expand from 11.13 billion USD in 2022 to 48.2 billion by 2026 and 137.67 billion by 2030.

Global digital twin market share graph

This surge is primarily attributed to advancements in IoT, AI, and machine learning technologies, and this can be seen, for example, in the fact that amongst the leaders in the field, besides industrial powerhouses such as General Electric, Siemens and Dassault, also stand IT giants such as Microsoft and Amazon Web Services.

Regionally, North America dominates the market share due to its robust technological infrastructure and significant investments in IoT and AI by key industry players. The Asia-Pacific region is also witnessing substantial growth, with countries like China, Japan, India, and South Korea investing heavily in digital twin technologies to bolster their manufacturing and industrial sectors. Emerging markets in the Middle East, Africa, and Latin America are developing, driven by governmental initiatives and the increasing presence of domestic and international players focusing on energy, utility, and industrial applications.

The digital twin market in the UK is set to record growth of around 30% from 2022-2027. There, the aerospace & defence sector, in particular, is expected to create lucrative opportunities, with the aviation industry adopting digital twin technology to enhance fleet management, reduce maintenance costs, and optimise overall performance. Predictive maintenance is a key application area, with numerous businesses adopting digital twin-based models to prevent system or process failures through real-time equipment monitoring. Unfortunately, despite the UK’s leadership in developing these technologies, their adoption rate has lagged, particularly among small and medium-sized enterprises (SMEs). Even programs like Made Smarter and the High-Value Manufacturing Catapult still can’t help bridge this gap by encouraging UK manufacturers to integrate Digital Twins and other modern industrial technologies into their operations.

Of course, the market also faces obstacles globally, such as high implementation costs and growing cybersecurity risks. Even more severe are practical bottlenecks, like the real-time acquisition of complex data, interconnection of heterogeneous physical entities, building high-fidelity models while ensuring consistency and reliability, and providing services that meet the needs of different sectors and different business applications based on such complex models and data.

Yet somehow, this doesn’t deter businesses – especially as the ongoing advancements in digital twin technologies, like the development of generic processes, frameworks, and architectures to enhance simulation-enabled engineering, help introduce Industry 4.0 principles and streamline the processes from planning to monitoring by emphasising the interaction between engineering tasks and models via the generic DevOps approach.

Also, the recent introduction of an Open Testing Architecture supports “simulation as a service,” enabling efficient model exchange within simulation systems. This breakthrough fosters the standardisation and automated configuration of modules, enhancing the exchangeability of models and the overall efficiency of engineering simulations.


In wrapping up, the exploration of Digital Twin technology underlines its pivotal role in the intersection of engineering, computer science, and business strategy. This technology, characterized by its capacity to create real-time digital replicas of physical assets, offers unprecedented opportunities for optimizing operations, enhancing predictive maintenance, and driving innovation across various sectors. The integration of advanced technologies such as AI, IoT, cloud computing, and machine learning into digital twins enables businesses to not only predict and preempt operational issues but also refine and accelerate decision-making processes.

However, the adoption and implementation of digital twins come with a set of challenges, including the complexities of data management, integration with existing systems, and the philosophical nuances of mirroring the physical world in a digital context. Despite these hurdles, the strategic benefits of digital twins for competitive advantage are clear. They empower organisations to leverage detailed insights and analytics for superior resource utilisation and operational efficiency and to foster a culture of innovation.

As industries continue to evolve in the digital era, the importance of digital twins cannot be overstated. Businesses that successfully navigate the technical and organisational challenges to implement these technologies stand to gain a significant market edge. The future outlook for digital twin technology is not just promising but essential, marking it as a cornerstone for companies looking to thrive in an increasingly complex and competitive business landscape.


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