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  • This is Wärtsilä OpenClose subpages
    • CEO review
    • Wärtsilä in brief OpenClose subpages
      • Corporate strategy
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        • Financial targets
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    • Wärtsilä's sustainability approach
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      • The Wärtsilä share on Nasdaq Helsinki
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      • Financial information 2016
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    • Five years in figures
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        • 1. Segment information
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Annual Report 2013

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Annual Report 2014

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Annual Report 2015

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Annual Report 2016

Change is the only constant

Digitalisation and the Internet of Things are now among the most frequently used terms on the world stage. From the communications revolution that has taken place in the span of a single generation, to the patterns of disruption that are now transforming our way of life one industry at a time, this topic is awash with the theme of change. The only constant appears to be the fact that nothing will remain the same for too long.

Ari-Pekka Saarikangas, Director of Asset Performance Optimisation at Wärtsilä, is acutely aware of how digitalisation trends will impact the company’s way of working. “Wherever you look,” he points out, “the world is not the same any more, and the rate of change is extremely fast. We have more and more data available about our customers operations and equipment, as well as data on our own internal processes and performance. There are clear possibilities to develop the business and contribute to business growth.”

Wärtsilä’s customers will soon be able to take advantage of these huge volumes of information more fully. The opportunity hasn’t arrived a moment too soon. As Saarikangas points out, “Disruption is taking place in many industries, and it’s really happening now. We can’t wait: we need to take it seriously and make full use of this momentum, and that means today.”

Another related trend, points out General Manager of Business Innovation Tero Hottinen, is the need for improvements to usability. “In the past, we were high-tech experts making products for other high-tech experts, but nowadays people’s skill sets are much broader. Perhaps we are more versatile in the range of topics we can address, but extreme specialisation is rare these days, and this calls for high usability in whatever you are doing. Digitalisation can really help with that.”

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A digital heritage

Of course, Wärtsilä is no stranger to the way digital development can yield business benefits for its customers. As far back as 2002, the company already had a web-based application online for spare parts ordering, to name just one example.

“I think we have been early birds here,” Saarikangas agrees, “but now you can make it even easier for customers. There are technologies and knowledge available today that enable direct integration of the customer’s ERP system with our online spare parts supply, for example.”

This second wave of digitalisation, he maintains, has vastly increased potential to make things easier for users, and indeed user experience has become one of the key development criteria. Making a solution truly user friendly provides a great deal of value to the customer, so in this case the experience goes beyond just ordering the spare parts into delivery tracking and other online services, all within a few clicks. Wärtsilä’s customers have been enthusiastic at the prospect of having a knowledge base for their use, whenever, wherever.

“ We have gradually reached the state of mind where we demand digital services more or less automatically. ” - Ari-Pekka Saarikangas

“I also think that we as human beings have changed,” Saarikangas speculates. “We have gradually reached the state of mind where we demand these digital services more or less automatically. As consumers, if we didn’t have web bank access, we might simply change our bank. Back when we began developing digital tools at Wärtsilä, this certainly wasn’t the case.”

Hottinen picks up the thread: “Youngsters today are practically born with tablets in their hands and intelligent watches on their wrists,” he says. “We’re coming to the stage where digitalisation and all its possibilities are expected as standard. But this isn’t just about keeping up: it lets us do things in a much more effective manner, whether in terms of transparency of information, or optimising performance. New ways of doing things, things that were previously unimaginable, are going to become part of the standard offering.”

Ringing in the new

One development area which both of these digitalisation-focused colleagues are both keen to highlight is that of intelligent analytics measurement, in which number crunching is taken to a new level of pervasiveness and complexity.

“Recently we have started to see the introduction of self-learning algorithms into data processing,” Saarikangas explains. “This basically means that you don’t need to manually go through the data but can instead automate a great deal of the data investigation. Taking the existing data handling and introducing elements of intelligence is a fundamental change that has been going on over the past two or three years.”

But how will this help Wärtsilä’s customers? Saarikangas summarises the company’s capabilities to date in the area of data utilisation as primarily the monitoring, gathering and visualisation of key data for certain purposes, but points out how the scope will shortly become much wider.

“The next step,” he says, “is providing detailed advice on customers’ operations based on all this data, to help them to optimise the operation of their vessel or power plant. Our position allows us to look at these assets holistically, not just on the level of a single engine or propulsion device.”

He proposes a scenario in which Wärtsilä – in addition to providing information on safety, reliability, or efficiency – can supply business-critical suggestions that have a clear effect on the customer’s bottom line.

“On a container ship, for example, we might help to develop a vessel’s capacity, showing the optimum order in which the customer should stow containers to reduce time in port. From optimising the voyage, we could move into providing guidance across the entire value chain, from port to port.”

This new approach is exemplified in Wärtsilä’s recently launched Genius services, which demonstrate a switch of focus from maintenance and servicing to more comprehensive optimisation of customers’ business, based on a consolidated approach toward their entire installation, utilising the benefits of real-time data and analytics.

These services are grouped into three sections: Optimise, providing advice to customers on how they can improve various aspects of their operations; Predict, where the focus is on preventing the unexpected and predicting maintenance needs, combined with performance optimisation; and Solve, which emphasises remote support, remote trouble shooting and remote operation support.

In the future, Saarikangas points out, this area will also encompass voyage planning, ship efficiency advisory services and energy analysis, as well as extensive condition monitoring of the main equipment, bringing them together into one consolidated solution.

The shape of Wärtsilä to come

With technology moving forward at such a rapid pace, it’s tempting to speculate on how the nature of doing business in the marine and energy markets itself may change. While even digitalisation experts have limited powers when it comes to predicting the future, both Saarikangas and Hottinen have some insights on certain shifts that may be on the horizon.

Saarikangas sees the developments of new earnings models as one potential theme of future change. “Instead of selling spare parts,” he explains, “we could be selling advisory services. Instead of on-board route course analysis, we could sell remote troubleshooting. Instead of being briefed by customers about their installations, we could sell benchmarking data on where they should be, and where the rest of the world find themselves: those other players who are using similar vessels or equipment.”

“ Start-ups are good at getting under customers’ skin. This is something that all big corporations can learn from. ” - Tero Hottinen

This, of course, may lead to new earnings models. Whereas up to this point Wärtsilä has primarily made long-term agreements with customers based on the resources involved and the calculated costs, the company is currently investing more and more in long-term agreements with performance guarantees. This will be enabled by including Wärtsilä Genius services as a component of the agreement.

For Hottinen, who is responsible for Wärtsilä’s forward-thinking engagement with the start-up scene, the development of a more fragmented approach to innovation is of signal importance. To keep Wärtsilä engaged with this high-energy arena, he has recently been instrumental in developing Wärtsilä Marine Mastermind, a marine-focused competition targeted at start-ups and young growth companies. The initiative was launched to coincide with Wärtsilä’s presence at Slush, the premier Nordic start-up event.

As befits the deep connection Wärtsilä aims to encourage with the world of small, agile solution developers, the competition winner will benefit from a month-long product or service development sprint as opposed to a monetary contribution. This sprint is focused on the challenges of innovation and the development of the concept for commercialisation, including prototyping as well as business and implementation planning. The final goal is to deploy the concrete idea in the future together with Wärtsilä.

“The key criteria that we emphasise in our dealings with start-ups are the usability of the solution, innovativeness, customer focus and business potential and scalability,” says Hottinen. “Start-ups are good at getting under customers’ skin. They are agile and able to pivot their product development in a fast manner if needed. This is something that all big corporations can learn from.”

Organisations still willing to find an education in the strengths of their smaller counterparts after over a century of operating history are few and far between. Neither Saarikangas nor Hottinen are losing sight of the fact that digitalisation may be the forum for some of Wärtsilä’s most important lessons yet.

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