Digital transformation

Norwegian industry is undergoing change – not primarily because of the coronavirus crisis, although it has affected many businesses. Increased globalisation decades has affected the framework conditions for Norwegian industry. In addition, climate change means that society, in Norway as in the rest of the world, needs to restructure to become more sustainable.

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Photo: © Yara International. Used by agreement

At the same time we see technological developments – especially related to digitalisation – that require new skills and ability to restructure at a fast pace. This can include automation and digitalisation, but also new value chains and business models.

Status

In a survey undertaken by KPMG for the Ministry of Local Government and Modernisation on digitalisation in industry, 93 per cent of respondents report to have engaged in digitalisation projects during the last two years. Altogether 65 per cent state that the project has been successful, and 95 per cent believe that their business will benefit from increased digitalisation.

In the digitalisation projects that have been implemented, the most frequently used technologies include automation, digital collaboration tools and the use of cloud services and platforms. The businesses have to a varying extent incorporated technologies such as artificial intelligence and IoT. More than one-third state that these technologies are not relevant for them at the moment, while less than ten per cent have adopted these technologies. On the other hand, these technologies are relatively new, so the fact that approximately 40 per cent report to have started using such technologies at all shows that there is interest in as well as a potential for their expanded use in the years ahead.

The main motivation for digitalising is to enhance efficiency, but more than one-half also report that they digitalise to provide a better experience for their customers. As many as one in every three respondents report using digitalisation in order to increase the sustainability of their value chain.

Norwegian industry is diverse in terms of digitalisation. Some industries have come far, while others have traditionally not been very digital. Some industries have been strongly affected by the coronavirus, but not all. In this document, we have selected two sectors that are especially important for Norway – aquaculture and the maritime sector. We also take a look at a sector in which digitalisation has not traditionally been prominent, but where there has been a good development in recent years – agriculture. And we examine the tourist industry, which has been especially hard hit by COVID-19.

Aquaculture

The seafood industry is Norway’s second largest industry. In 2020, Norway exported seafood worth NOK 105.7 billion, and employment in the industry and its supply chain amounted to an equivalent of 44 000 fulltime jobs, mostly outside of the major cities. Traditionally, aquaculture has mostly involved manual labour, with little use of data for purposes of process improvement. However, constantly growing production volumes, stricter government regulations, consumer demands and increased global competition have spurred a rapid development towards automation and use of new technologies.

When it comes to understanding the value of sharing and collaborating over data, the aquaculture industry is in a unique position. Different companies have installations in the same fjord systems, use the same methods of operation, and share the same challenges. The industry is progressing from a situation with a few daily manual measurements to a continuous stream of data from sensors all day, year-round. This makes for a range of new opportunities, but also requires new and modern technology, new specialist skills, and new ways to collaborate over data. The key technologies will include sensors that collect data automatically, transmission of data from the installations and the environment to the cloud, and artificial intelligence that can provide new insight.

Technology that can help ensure sustainable aquaculture is a precondition for long-term growth in this industry. Industrial clusters are an instrument that can be suitable for promoting industrial development based on technology. Norwegian Innovation Clusters is a collaborative effort by Innovation Norway, the Research Council of Norway and SIVA. The Norwegian Centre of Expertise (NCE) Seafood Innovation Cluster is recognised as one of the world’s most complete industrial clusters and knowledge hubs in the seafood industry. The cluster encompasses 70 partners that represent a total of 150 small and medium-sized enterprises. The cluster is concentrated in Hordaland county, but is represented along the entire Norwegian coast as well as in international seafood regions. The cluster is responsible for AquaCloud, an initiative that seeks to transform the industry with the aid of Big Data.

The maritime industry

The Norwegian maritime industry includes shipping lines, shipbuilders and suppliers of equipment and specialised services. In 2018, the industry created values to the tune of approximately NOK 89 billion and employed nearly 84 000 people all over the country. The maritime industry has been severely affected by COVID-19. The crisis has had a dramatic impact on activities, jobs and finances at a time when the industry already had been rendered economically vulnerable by the fall in oil prices in 2014.

Digitalisation and automation are increasingly prominent characteristics of the maritime industry, in the form of automated processes on board vessels and more integrated systems. This makes it possible to optimise activities and improve communication and safety. Digital transformation is set to affect trade patterns, production methods, monitoring and operations. As a result, the maritime industry produces more data that can be used for such purposes as machine learning. This has the potential to ensure more efficient, safe and environmentally friendly shipping and increase value creation.

The Research Council of Norway’s programme for maritime activities and offshore operations, MAROFF, supports research and development that help increase value creation in the maritime industry. Autonomous and remote-controlled vessels and digitalisation of the maritime industry are prioritised programme areas.

In association with the Government’s economic policies to counter the virus outbreak, funds were granted in 2020 to construction of two new research vessels for the Institute of Marine Research and the Geological Survey of Norway, and to upgrading and maintenance of existing research vessels.

Digital twins

In recent decades, vessels have become increasingly complex, with lots of software and integration between technical solutions provided by a range of different suppliers. It is challenging to ensure optimal interaction between the various components without being able to simulate how they will impact on each other, for example in order to assess possible consequences of an upgrade or change in one of the constituent parts.

The maritime sector has a long tradition of using scale models to optimise ship designs and test their stability. The concept of ‘digital twin’ has a resemblance to such models, by being a digital representation of a physical object – such as a vessel – normally with additional data to reflect its context, production and other information. Digital twins can be used for purposes such as optimisation of design, construction and operation of vessels, and for simulating the interaction between components.

Agriculture

Norwegian agriculture is important to maintain food security, value creation, dispersed settlement and the cultural landscape. There are farms all over the country, and agricultural properties account for more than three-quarters of the mainland area.

Norway is a high-cost country with a climate and topography that affect the economics of food production. These cost disadvantages mean that Norwegian food production needs to become more efficient in order to stay competitive, while the unique features are upheld. Norwegian farmers have been quick to adopt new technology to optimise their own production. Technological development, such as new machinery and automation, has boosted productivity and saved labour, and this has reshaped agricultural methods. Over the last ten years, Norwegian agriculture has seen its labour productivity grow by 1.7 per cent per year. In the same period, average growth in mainland Norway amounted to 0.9 per cent.

Research and development in combination with domestic production of new agricultural machinery, has helped ensure that Norwegian agriculture has stayed innovative and adopted new technology on a large scale. In a global context, Norwegian agriculture is highly mechanised.

Precision agriculture with the aid of robotic weeding, crop spraying and fertilising helps reduce costs and environmental impact, while increasing crop yield. Precision agriculture is a strategic priority for the research communities as well as for suppliers of agricultural equipment. For example, many farmers have started to use sensor technology to optimise their production process. This helps reduce costs for fertiliser and pesticides, while increasing crop yields and product quality.

Agricultural technology – agritech

Agritech means to use technology in agriculture to increase yields, efficiency and profitability. In many cases, such solutions will also be more sustainable. A study undertaken by the Norwegian Institute of Bioeconomy Research (NIBIO) points to a clear potential for increasing the competitiveness of horticulture through automation of manual tasks with the aid of robotics, such as mobile robots for plant care, equipment for targeted thinning of fruit-tree blossoms and harvesting robots for strawberries, raspberries and broccoli. In plant production, small unmanned drones have also become a useful tool, through their ability to carry sensors that can collect data on cultivated areas and crop status. This can help the farmers adjust their input factors through the growing season.

Public/private sector development

A project is currently being implemented to increase the competitiveness of agriculture and modernise the management of the sector. The agricultural industry collaborates with ministries, government agencies and R&D institutions on issues such as consent-based access to both privately and publicly held industry data, better decision support systems for farmers, digital applications for agricultural loans, and guidelines for ownership to data in Norwegian agriculture.

Data flow in agriculture

Historically, Norwegian agriculture has not shared much data across sectors – for example across livestock and plant production, or with external communities. A shared log-on system has simplified the exchange of electronic data in agriculture, and the establishment of ‘Landbrukets Dataflyt’ (‘Data flow in agriculture’) has facilitated data-sharing across sectors.

‘Landbrukets Dataflyt’ has developed solutions for farmers, purchasers, suppliers, accountants, banks, public agencies and research institutions. The IT systems are integrated and share data through different interfaces, such as APIs. The enterprise also operates a shared authentication solution that works for machine-to-machine authentication and can authenticate such installations as milking robots. This is the start of an IoT register in agriculture, where dataflows and ownership of data associated with IoT can be linked to individuals and organisations.

Tourism

Before the coronavirus pandemic, tourism was one of the world’s fastest-growing industries. This industry is important for jobs and local development, not least in many rural communities. Norway has grand scenery, a diverse cultural heritage and a cultural life that attracts international attention in a growing number of areas.

Tourism is one of the industries that has been hardest affected by the coronavirus pandemic. The fact that Norwegians largely spent their holidays at home in 2020, cannot compensate for the shortfall of foreign visitors and the drastic restrictions on fairs and conferences. In addition, future trends are uncertain. Parts of the customer base are expected to return when corona restrictions are lifted, but the pandemic may result in long-term and even permanent changes in demand, to which the sector will have to adapt. Experience from 2020 has resulted in a need for change and improved cost effectiveness in the industry. The major operators are to some extent able to invest in this type of development work, but this could pose a challenge to SMEs.

The opportunities inherent in digitalisation of society have changed large segments of the traditional tourism industry. The internet, smartphones, Big Data, electronic payment solutions and social media have changed the visitor expectations, how new destinations are discovered, trips are booked, new destinations are navigated, choice of accommodation and attractions, and how memories from trips are shared even before returning home. The industry has embraced the opportunities that digitalisation provides and increased its productivity, including through more efficient processes and new ways to reach out to customers. At the same time, the industry is also impacted by global online operators such as TripAdvisor, Airbnb, Google and Expedia.

Forskerpool is a scheme linked to the R&D tax incentive scheme SkatteFUNN. Through Forskerpool businesses can apply for up to 50 hours of assistance from a researcher to develop an idea or receive input to solve a problem. Since 2019, the scheme has targeted enterprises that need assistance with research related to ICT and tourism.