Executives lack confidence when it comes to Industry 4.0, says Deloitte

Executives lack confidence when it comes to Industry 4.0, says Deloitte

Recruitment and training at every level in the corporate hierarchy may need a rethink, if companies are to reap the full benefits of industrial IoT, says a new report from Deloitte. 

Senior business executives are optimistic about the potential offered by Industry 4.0, but lack confidence when it comes to investing in the industrial IoT. 

That’s according to a new report from Deloitte, The Fourth Industrial Revolution is Here – Are You Ready? Released to coincide with the World Economic Forum this week in Davos, Switzerland, this explores the business world’s readiness to  harness the opportunities offered by the Industry 4.0 trend that sees machines increasingly become connected and able to report on their status and performance, as well as the environment around them.

Sometimes referred to as ‘the fourth industrial revolution’, it is set to define the business world over the next few years, as technologies such as sensors, analytics, AI, cognitive computing are increasingly applied to industrial processes. 

Deloitte Global, part of the management consultancy firm, surveyed 1,600 C-level executives from 19 countries for its report, quizzing them on their ability to leverage these technologies. 

Read more: Survey shows IIoT has “crossed the chasm”, claims Zebra

Lack of confidence

Almost nine out of ten respondents (87 percent) said that they expect Industry 4.0 to create social and economic equality and stability for their companies. But regardless of this, many firms feel that they’re not ready to harness these changes. Only one in three said they’re highly confident about stewarding their organisations in the connected world and just 14 percent said they were ready to implement Industry 4.0 technologies. Because of these attitudes, says Deloitte, businesses and executives risk falling behind.

At the same time, executives don’t feel that their organizations have the right talent to succeed in the fourth industrial revolution, either – but they’re trying their best to build more suitable teams. Again, more than four out five respondents (86 percent) said they’re working to hire people with the right skillsets for technologies such as artificial intelligence (AI) and IoT. 

And companies that are already focused on Industry 4.0 are exploring roles that allow staff to leverage “greater innovation, alternative work environments and new approaches to learning and development”.

Overall, key decision-makers are aware that they must invest in technology to succeed in an increasingly connected world. But many of them are struggling to make a business case due to a lack of comprehensive strategies.

Read more: IIoT adoption increases, but projects still early-stage, says Bsquare

A unique opportunity

Punit Renjen, CEO of Deloitte Global, has claimed that the fourth industrial revolution will have huge impact on the world as a whole, and not just the workplace. “The rapidly advancing technologies driving Industry 4.0 are bringing about social and economic change rapidly in an environment of unparalleled global connectivity and demographic change,” he said. 

“It’s a time of great opportunity, but also risk. We developed this research to better understand how executives are navigating the pervasive shift and to uncover areas where they can more effectively influence how the Fourth Industrial Revolution impacts their organisations and society.”

Our Internet of Manufacturing event is coming to Munich on 6-8 February 2018. Attendees will get the chance to learn more about how connected technologies open up new paths to increased productivity and profitability for industrial companies. 

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Manufacturing executives: your cloud moment

Remember when software was sold, shipped and installed from boxes of disks and documentation? The shift to cloud, and specifically Software-as-a-Service (SaaS) delivery, changed that; it also changed the way software was designed, priced, sold, and licensed. While many software vendors fought the demand for cloud services, its disruption also came with unique benefits. Ultimately that cloud moment, the benefits of shifting to a SaaS business model, provides lessons for today’s industrial manufacturers in the Internet of Things (IoT) and Digital Twins.

“The job is no longer to sell as much software as possible. It’s to help the customer get as much out of the software as possible.”
-Brian Halligan, CEO of HubSpot ($ 271M Revenues / 2016)

Shelf-ware to log files: Finding value-add

In the past, CIOs and software firms were aware that lots of traditional software goes uninstalled (i.e shelf-ware). A study dating back to 2011 found, “United States and United Kingdom wasted $ 15.3 billion per year on unused software, including $ 12.3 billion in the United States alone.” Years after the boxes were delivered, those who bought and sold traditional software could seldom show any value add; use and outcomes were rather difficult to prove. Exchanging traditional installed software for SaaS allowed software providers to incorporate web log files that captured subscriber visits, duration, and measures which took the guess-work out of real-world use and users. This was significant for software providers who might learn that 64% of functionality was rarely used.

Lesson: Sensors are industrial ‘log files’ offering more than insights on maintenance of equipment but amount of use, the users experience and patterns you need to know for creating value-add and services. Don’t underestimate the upstarts ready to use this data to steal your cloud moment in manufacturing.

Aging to agile: Faster software delivery on the cloud

In the traditional world of installed software, firms often were going gold (producing a new release) at a rate of 1x per year; clients would then wait an additional 3-6 months before installing any upgrade. For the software vendor, racing to match a competitor, or tune-up features that missed-the-mark was always waiting until next year.  The software providers, who embraced SaaS, had an opportunity to continuously deliver new features, publishing upgrades several times a year. In SaaS, providers deliver one code base to all clients making it easy to innovate, test, deploy, and repeat. Today’s SaaS providers became acutely aware of their software use and users so as to deliver new and innovative capabilities, on a bi-weekly or monthly basis, thereby creating almost custom client experiences.

Lesson: Use this opportunity to think and act like a software firm; you can continuously innovate and deliver on differentiated menus, user features, or/and customization.  If you think the lessons software and agility do not apply to your in industry, consider lines of code in modern cars. Soon, it would no longer be accurate to label Ford, General Electric, General Motors, Boeing and others as just manufacturers; they’ll instead become software developers who also manufacture things.

Size was seniority: Creating equality of input

Seemingly unfair, traditional software centered upon the demands of large established clients, swaying engineers and their priorities away from innovation to stabilization. Clayton Christensen’s book The Innovator’s Dilemma put it as, “Customers of established firms can hold the organizations captive… to keep them from commercializing disruptive technologies.” Your smaller customers can easily be overlooked but they still need to be impressed. That means making sure they get the promised business benefits and outcomes they signed up for.

Lesson: Try to avoid being held captive and consider new technologies like Digital Twins as the equalizer, allowing engineers to see and compare the use and outcomes, in clients both large and small.

To learn more about the opportunity in IoT and Digital Twins, we encourage you to attend LIVE SLAM 17- Internet of Things Conference, June 21-22 where you can meet the experts and explore the opportunities so you can meet your cloud moment with confidence.

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