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Industry 4.0: Building the DigitalEnterpriseCXO konference
28 April 2016Starter: 10:30
Nils Budde, Executive Director, Epinion
Gorm Lykke Østergaard, Partner, PwC
www.pwc.com
1. Industry 4.02. Survey & Results3. What companies needs to do now
Industry 4.0 – Building the Digital Enterprise
CXO konference
PwC
Industry 4.0
3
The digital enterprise comprises of digitised and integratedprocesses, products & business models
Core Application Fields
I
Digitization ofproduct and
serviceofferings
Digitization andintegration ofvertical andhorizontal
value chains
Digital Business Modelsand customer access
III
II
IV
Industry 4.0
Compliance, security, legal & tax
Dig
ita
lE
na
ble
rs
Organisation, employees and digital culture
IT Architecture and data management
Location DetectionTechnologies
CloudComputing
Smart Sensors
AugmentedReality /
Wearables
Internet ofThings
3D Printing
Big DataAnalytics
AdvancedHuman-Machine
Interfaces
Mobile Devices
CustomerProfiling
Authentication &Fraud Detection
Core technologies to provide innovativeIndustry 4.0 solutions
PwC
Survey & Results
The 2016 Industry 4.0 Survey is based on participating 2,000+ companies from 26 countries in 9 industry sectors
26 Participating countries Industry split of 9 industries
Industrysplit
21%
19%
11%
10%
9%
4%
9%
8%
21%
Industrialmanufacturing
Engineering &construction
Chemicals
Electronics
Transport &logistics
Automotive
Others
Metals
Forest, paper & packaging
2%
Aerospace, defence & security
Mexico
USA
Canada
Brazil
Australia
JapanChina
MiddleEast
Singapore
South Africa
UK
NetherlandsDenmark
SwedenAustria
Poland
Finland
PortugalSpainFrance
Italy
Switzerland
Germany
India
Source: PwC Strategy& Global Industry 4.0 Survey 2016
Key findings of the global 2016 Industry 4.0 study
I4.0
Big investments with bigimpact: It’s time to commit
Data analytics & digital trustare the foundation oftransformation
Industry 4.0 is acceleratingglobalisation, but with adistinctlyregional flavour
Robust, enterprise-widedata analytics capabilitiesrequire significant change
Focus on peopleand culture to drive
transformation
Deepen digitalrelationships withmore empowered
customers
Digitization drivesquantum leapsin performance
Industry 4.0 - From talkto action andimplementation
Digital operations is not about technology, but aboutemployee skills & transformation management
Note: Up to three mentions possible; figures in percent
26
17
10
9
10
8
6
6
4
4
24
23
28
27
15
17
15
12
12
10
Lack of digital standards,norms and certification
16
25
21
40
36
Slow expansion of basicinfrastructure technologies
38
Concerns around loss of control overyour company’s intellectual property
14
Unresolved questions around data securityand data privacy with external data
Leadership from top management
Lack of digital culture and training
Insufficient talent 25
50
Lack of a clear digital operations vision andsupport / leadership from top management
High financial investment requirements
Unclear economic benefitand digital investments
18
Top 3 challengesBiggest challenge
Focus on peopleand culture to drive
transformation
Data analytics capabilities: 18% have advanced capabilitiesand half of companies have dedicated organizational set up
Organisation of data analytics capabilitieswithin the company
Existing data analytics capabilities today –Company perspective
Note: Answers shown are rounded Data analytics & digital trust are thefoundation of transformation
Across the world companies are expecting a significantimpact on digitisation and integration
72%
3540
319
2741
4727
409
3531
2738
1926
33
JA
CAMX
CN
DACH
UK
NLS
FRIT
E/PTDK
ME
US
IN
SABR
7677
5772
6462
8265
6474
7769
5976
6071
82
SA
UK
NL
CN
S
JAME
MXCABR
US
IN
DKE/PT
DACH
ITFR
Companies with high digital capabilities –In 5 years
Companies with high digital capabilitiesToday
+39p33%
Robust, enterprise-wide data analyticscapabilities require significant change
Industry 4.0 is accelerating globalisation with regional differences
Regional expectations – Big gains are anticipated by industrial products companies in all regions
Industry 4.0 isaccelerating globalisation,but with a distinctlyregional flavour
Industrial companies globally invest 5% oftheir revenue or $900 billion p.a. until 2020
Expected return on investment period for digitalinvestments
Industry 4.0 investment(in % p.a. until 2020)
Big investments with big impact:It’s time to commit
From talk to action – Industry 4.0 is moving from strategichype to operational reality
Shown: Percentage of companies surveyed reporting high degrees of digitization and integration (4 or 5 on a scale of 1 “very low” to 5 “very advanced”)Source: PwC Strategy& Global Industry 4.0 Survey 2016
Percentage of companies reporting high degrees of digitization andintegration today/in five years for selected operational functions
+39p33% 72%
High level ofdigitisation today
High level ofdigitisation in 5 years
Product development &engineering
68%35%
Vertical value chainintegration
Horizontal value chainintegration
42%
65%34%
41%
Digital businessmodels, product and
service portfolio
Customer access/Channels & marketing
71%
72%
64%29%
In 5 years
Today
High level of digitization by operational functionHigh Level of digitization and integrationtoday and in the next five years
Industry 4.0 - From talk toaction and implementation
Digitisation drives quantum leaps in performance and digitalrevenue
Sources of additional revenueAdditional revenue by Global Industry –in USD bn p.a. until 2020
40
108
52
103
37
11
105
28
8
Chemicals
Aerospace/Defense
Weigthes Average(%)
Total 493
Automotive
2,9
Electronics
Transport/Logistics
Forest Paper/Pack.
Metals
IndustrialManufacturing
Engineering &Construction
Digitising products and services within theexisting portfolio
New digital products, servicesand solutions
Offering big data and analyticsas a service
Personalised products and masscustomization
Capturing high-margin business: Improvedcustomer insight from data analytics
Increasing market share of coreproducts
+2,9%
Digitization drivesquantum leapsin performance
Digitisation enables quantum leaps in operationalcost reduction and efficiency increase
Sources of Lower Cost and Higher EfficiencyCost reduction by Global Industry –in USD bn p.a. until 2020
28
62
61
52
54
28
78
49
9
IndustrialManufacturing
Metals
Forest Paper/Pack.
Aerospace/Defense
Engineering &Construction
Chemicals
Weigthes Average(%)
Total
Automotive
421
3,6
Transport/Logistics
Electronics
Real-time inline quality control based on BigData Analytics
Modular, flexible and customer-tailored production concepts
Real-time visibility and more flexibalin process and product variance
Predictive maintenance on keyassets using smart algorithms
Vertical integration from sensors throughMES to real-time production planning
Horizontal integration & track-and-trace forbetter inventory & logistics performance
System based, real-time end-to-endplanning and horizontal collaboration
Digitisation of processes for smarter use ofhuman resources and higher operations speed+3,6%
Digitization drivesquantum leapsin performance
16
Source: PwC Strategy& Global Industry 4.0 Survey 2016
The golden bullet: First Movers achieve both significantrevenue growth and cost reduction
Leading companies achieving both significant digital revenue growthand cost reduction over 5 years
Cost reduction
Re
ve
nu
eg
row
th
>20%<20%
<20%
>20%
All Digital MaturePlayers
38%
52%
24%
First Mover
% companies >20% revenue increaseand >20% cost reduction cumulatedover 5 years
467
Digitization drivesquantum leapsin performance
PwC
Conclusion - What companies needs to do now
1. Companies are getting down to business with Industry 4.0• They expect cost savings of US$ 420 billion per year• They expect additional revenue of US$ 490 billion per year.
2. Companies will invest in Industry 4.0• 5% of their revenue or US$ 907 billion p.a. by 2020, with the majority
expecting a return on invest within two years.
3. Companies recognise that Industry 4.0 is accelerating globalisation, withregional differentiations.
4. Capability to manage Big Date in a way where they can manage largeamount of data fast ,is the foundation of Industry 4.0 and companies need touse the full potential of predictive analytics to succeed.
5. The biggest implementation challenge isn’t the right technology, it’s a lackof digital culture and skills in their organisation.• Companies need to drive digital transformation from the top
management all the way to the shop floor.
Conclusion:
Blueprint for implementation success:Six steps companies are taking to build a Digital Enterprise
PwC
Fremtiden har indhentet os
Source: Illustreret Videnskab & filmen Minority Report
PwC
Nils Budde – Executive Director, Epinion
Source: PwC Strategy& Global Industry 4.0 Survey 2016
Questions?
I4.0
Big investments with bigimpact: It’s time to commit
Data analytics & digital trustare the foundation oftransformation
Industry 4.0 is acceleratingglobalisation, but with adistinctlyregional flavour
Robust, enterprise-widedata analytics capabilitiesrequire significant change
Focus on peopleand culture to drive
transformation
Deepen digitalrelationships withmore empowered
customers
Digitization drivesquantum leapsin performance
Industry 4.0 - From talkto action andimplementation