Can combining digital twins and the Internet of Things unlock value?

Snapshot

A digital twin is a digital replica of a physical object or system, used for simulation, analysis, and optimisation. It can help improve efficiency and performance, and reduce costs and risks to businesses
Under data legislation in the EU, digital twins are likely to fall within new regulated frameworks for making data available to users, ensuring fair and transparent access to data for all stakeholders
Appropriate technical functionality will need to be designed into digital twins to enable compliance with the coming expansion of data regulation while also maintaining high standards for the processing of personal data
The growth in prevalence of the use of digital twins is one of the key technological trends of the past year, particularly in conjunction with the growth of the Internet of Things

The Internet of Things (IoT) and "digital twins" are often cited as two of the most exciting forms of new or emerging technology. The markets for both are rapidly expanding. But how can these forms of technology be combined to solve problems? And how will this crossover be influenced by data regulation developments?

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IoT and digital twins: the basics

The IoT is the term given to devices embedded with sensors or actuators (such as mobile devices, smart appliances, and connected machinery) connected to a network, other connected devices or the internet. These sensors and actuators allow for the collection, sharing and analysis of data about the way the devices or appliances are being used, how they are functioning and their environmental conditions. They can also enable automated responses to the data. The data collected allows the remote monitoring and control of connected IoT devices and is opening up opportunities for businesses and individuals alike.

A digital twin is a virtual, digital replica of a physical asset, system or process, which has a huge array of possible uses. It can be used in manufacturing to test, modify and enhance concepts and prototypes before creating physical versions. The utility of the digital twin used in the design and testing phase can be expanded by connecting it to the real-world asset with real-world data flows. Digital twins can be used as an advanced structure to process real-time data collected from IoT devices to assess current operation and predict future performance.

How are IoT and digital twins used together?

The use of digital twins is increasingly prevalent in manufacturing as it allows for accurate visualisation of individual physical objects, a whole production line, or even an entire processing plant. Paired with IoT, the use of this technology is valuable as a cost-saving measure.

The digital twin can be used both to monitor and alter performance in real-time to make processes more efficient, as well as to model future performance and identify potential performance issues before they arise. This allows operators to take pre-emptive action to prevent downtime and help to reduce the associated cost impact of unplanned maintenance and repairs, and the knock-on disruption to production output. Digital twins of individual products or components can become the foundation for an "assets as a service" business model where the utility of the asset is supplied as a service, rather than selling the asset itself.

In the real estate sector, digital twins are being employed to create a real-time database of a building's ecosystem. The application of digital twins to the built environment is expanding from the micro to the macro to the extent that it is now being used to aid the planning and management of entire cities.

Digital twins of a city can be created using data from a variety of IoT devices integrated in devices such as traffic sensors, weather stations and public utility systems, forming the digital infrastructure for smart cities. The digital twin can be used to monitor the city and to simulate its infrastructure and services. It can then analyse the potential impact of different planning options decisions, such as the feasibility of new transportation projects, potential bottlenecks in infrastructure, or the optimal deployment of public services such as police and emergency response teams. (For more information on digital twins in the built environment, please see our chapter in the ECLA report on data-driven business models.)

Enhancing ESG performance

In addition to helping reduce cost and drive efficiencies, IoT and digital twins are already helping to reduce carbon footprints on an organisational and national level. The large amounts of real-time data that IoT sensors can harness permit collection of increasingly accurate environmental, social and governance (ESG) metrics, which in turn can facilitate reduced energy consumption by creating transparency around use patterns, enabling optimisation. (For more information on IoT and the environmental benefits it is bringing, please see our separate article in this review here.)

Impact of data regulation on digital twins

In Europe, existing and upcoming data legislation will start to shape the future for digital twins. Under the draft Data Act (currently undergoing its first reading by the European Parliament) and the recently enacted Data Governance Act, stringent requirements around access to data are envisaged that will affect the adoption and use of digital twins.

One possible boost to digital twin adoption is the introduction of a new data intermediation services framework established by the Data Governance Act. Digital twins can benefit from additional revenue generation by providing valuable data, at a cost, to other organisations, for tasks such as optimising operations, improving decision-making, or developing new products and services. In addition, the Data Governance Act is intended to facilitate access to public sector data. These provisions may create opportunities for digital twins to improve their own performance by accessing a wider range of data and insights from third parties.

The Data Act will create new obligations on the providers of IoT systems to give access to users of the systems to the data generated by their use. Access is currently governed mainly by contractual provisions between the parties and can be very limited. These new data access rights will potentially require real time data flows to be accessible to the user and third parties that the user has nominated. Technical functionality to enable compliance with these data access obligations will need to be designed into digital twins (and IoT systems more generally).

Some use cases for digital twins will involve the mass processing of personal data. The regulations point in the direction of the development of more robust systems for the management and handling of personal data processed by digital twins, as well as the adoption of best practices and standards for the processing of such data.

Digital twins and the enterprise metaverse

Finally, the role of IoT and digital twins in commercial aspects of the metaverse is emerging. Digital industry systems can already integrate 3D augmented reality visualisations of the data analytics that they generate – some providers are rebadging their digital industry systems as the industrial metaverse. Currently, these systems are mainly closed, proprietary systems rather than the seamless digital environment envisaged for the metaverse. But as standards for interoperability emerge, digital twins may be integrated into wider systems as essential building blocks in our data-driven, digitally enhanced future.