The Fourth Industrial Revolution...Fig 2: The evolution of the Fourth Industrial Revolution Steam engine enables new manufacturing processes Mass production in steel, oil and electricity

December 2019

The Fourth Industrial Revolutionhow ready are you?

Page iii

The Fourth Industrial Revolution

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This report is the result of a collaboration between Fitch Solutions and TM Forum.

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ContentsSection 1: Introduction 1

Section 2: Market Demand 6

Section 3: Technology Use Cases 18

Manufacturing: IoT & Blockchain 18

Mining: AI & IoT 20

Retail: AI and Blockchain 22

Section 4: 4IR Supply Chain 25

Procuring 4IR technologies 31

Section 5 - Fourth Industrial Revolution Readiness Index 32

Conclusion 41


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Section 1: IntroductionIt’s not always easy to spot history in the making but there is now a growing consensus that the technological advances taking place in areas as diverse as robotics, sensors, big data, automation and artificial intelligence (AI) together constitute a new industrial revolution, one that is at least on a scale with its predecessors. This Fourth Industrial Revolution (4IR), or Industry 4.0, can broadly be categorised as one in which computers and automation systems interoperate seamlessly as the formerly disparate physical, digital and biological worlds merge. In many cases, the glue in 4IR is 5G connectivity, which enables the harnessing of data at high speeds and low latency regardless of location.

Fig 1: Impact of 4IR on a range of industries

• Provides sustainable competitive advantages

• Supports volatile business and product cycles

• Enables smart factories and automation

• Supports growing consumer interest in wellbeing

• Counters increasing costs of healthcare

• Enables safer patient data storage

• Supports disruption from fintech terms

• Enables online/mobile transactions and customized financial solutions

• Supports growing video surveillance and wearable cameras

• Defence against cyber attacks

• Supports electrification and renewable energy generation

• Enables de-centralized business models

Manufacturing Healthcare Financial Services

Public Safety Energy & Utilities

Industry 4.0 involves a series of initiatives focussing on the digitisation of manufacturing, and in this sense it clearly represents the next iteration of the three preceding industrial revolutions. It brings significant enhancements to industrial processes based on smart and autonomous systems and fuelled by data and machine learning (ML). Indeed, the most significant aspect of 4IR is surely the enhanced level of communication between computers and, ultimately, the ability to make decisions without human involvement. Through a combination of cyber-physical systems (CPS), the Internet of Things (IoT) and the Internet of Systems (IoS), truly revolutionary change is now on the horizon.

Although 4IR and Industry 4.0 tend to be used interchangeably, strictly speaking the latter term refers to the concept of smart factories in which machines are augmented with wireless connectivity and sensors while connected to a system that can visualise the entire production line and make decisions on its own. The term originates from the German Industrie 4.0 concept, which had at its heart a promotion of the computerisation of manufacturing, and is currently used to denote the strategy aimed at making Germany the lead market and provider of advanced manufacturing solutions. However, like the previous industrial revolutions, this latest iteration has rapidly expanded beyond its original roots and gone global. Of course, 4IR’s impact on manufacturing alone will be great due to its ability to facilitate a new form of smart production in which intelligent ICT-based machines, systems and networks are capable of independently exchanging and responding to information in order to manage complex industrial production processes. However, 4IR has much wider scope than just manufacturing, and there is the potential for it to have a significant impact in other areas too.


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Fig 2: The evolution of the Fourth Industrial Revolution

Steam engine enables new manufacturing processes

Mass production in steel, oil and electricity

Inventions of semiconductor, PC and internet

Gap between digital, physical and biological worlds is shrinking and

technology is changing faster than ever

First Industrial Revolution Second Industrial Revolution Third Industrial Revolution Fourth Industrial Revolution

Impact on SocietyGiven that 4IR encompasses breakthroughs in fields as diverse as AI, robotics, autonomous vehicles, 3D printing, nanotechnology and quantum computing, it is not surprising that its impact is being felt across a range of sectors. Yet, such is its importance that it could also force a rethink about how countries develop. There’s potential for policy-makers to harness 4IR technologies in order to create a more inclusive, human-centred future and for it to change the way humans live, work and relate to each other. The fact that billions of people and devices will be connected with unprecedented processing power and storage capacity, and the growing availability of vast amounts of data, surely also provides scope for governments to engage more effectively with their citizens and to improve public protection. At the same time, it may lead to a reassessment of the way in which individuals consume, work and assess health services.

Fig 3: 4IR Impact on government, businesses and society

Government

• Better citizen-government engagement

• Improved public service delivery• Greater government control of

infrastructure• Importance of agile governance• Change in security & conflict issues

Business

• New ways of serving customer needs• Disruption to well-established

incumbents from agile, innovative companies

• Consumer power impacting service delivery

• Technology platforms support a sharing economy

People

• Consumption patterns• Work & careers• Access to health• Privacy• Work-leisure balance• Nurture relationships• How we travel• Smart home appliances• Human augmentation

With its capacity to influence both the physical and virtual worlds it’s surely no exaggeration to say that 4IR has the potential to reshape much of the way we live our lives. Autonomous vehicles could transform cities and roads, freeing up space for more human-centred spaces, while new robotic technology could liberate workers from mundane tasks. And it could even reshape our minds and bodies, affecting not only our sense of privacy and how we interact with people but our very identity. Advances in biomedical sciences associated with 4IR, for example, could lead to improvements in health and longer life spans, as well as the ability to interact with people and objects simply by using the power of thought. Already radical innovations in neuroscience, such as brain-computer interfaces (BCIs), which are typically enabled via electromagnetic sensors, are emerging. Researchers at Massachusetts Institute of Technology (MIT) have demonstrated ‘smart limbs’ controlled in this way, and there is scope for the technology to be applied to the consumer realm too.


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Creating UncertaintyYet along with its many benefits, 4IR also has the potential to create a great deal of uncertainty too, not least as it is giving rise to a new era of globalisation, a term that for some has somewhat negative connotations in terms of income inequality, pollution and the replacement of human labour with machines. There may also be lingering historical concerns based on perceptions about previous industrial revolutions and their impact on the labour market. Clearly, radical innovation of this kind can have an influence on employment levels, although there is little reason at this stage to assume 4IR will lead to mass unemployment given that innovations of this kind tend to create many more opportunities than they destroy. However, many existing jobs will surely be disrupted by the new technologies encompassed by 4IR, with a direct impact on people’s lives and communities. This, in turn, will necessitate more and better collaboration between the private sector, academia and government on topics such as infrastructure, education, regulation and governance, both at the national and international levels.

There is also the danger that new technology, and the vast wealth it is likely to generate, could be used to serve the interests disproportionately of a small, powerful elite. Indeed, according to the World Economic Forum, “the economic benefits of the Fourth Industrial Revolution are becoming more concentrated among a small group. This increasing inequality can lead to political polarisation, social fragmentation and lack of trust in institutions.” The potential misuse of 4IR technologies is also an area of concern for some; advances in AI, robotics, and bioengineering might be used to create and deploy new, more deadly weapons, for example, while the emergence of brain-computer interfaces (BCIs) could lead to an unprecedented and unwelcome overload of data and connectivity. 4IR technologies might also result in enhanced levels of surveillance based on advances in computing power and AI tied to facial recognition, analysis of social networks and government records. Likewise, new miniaturised devices equipped with sensors, cameras and communication systems could be used not only to monitor crops but also to surreptitiously monitor specific groups of people, or even entire populations.

Fig 4: Potential dangers of 4IR.

Will organisations be able to adapt to technology changes? Will we have the right skills to

implement?

Will governments succeed in employing and regulating

new technologies to capture their full benefits?

Will shifts in power of technology create security

concerns?

Will this Revolution be evenly spread or only serve to foster

greater inequalities and fragment societies?

Data DilemmaMuch will depend on how these new technologies are used, of course, and where the power they create lies. 4IR is likely to lead to a big increase in personal data, potentially causing an acceleration of current trends for such personal information to be used, or misused, by corporations. In this way, 4IR technologies could further undermine people’s trust in technology, as well as the institutions and service providers that collect and maintain the data. Yet simply assuming such negative outcomes would be to place too great an emphasis on the dystopian; better instead to focus on the fact that this potential merely underlines the need for positive values to be built into these technologies in the first place, ensuring that they can help preserve what’s most important to us all.

Will organisations be able to adapt to technology changes? Will we have the right skills to

implement?

Will governments succeed in employing and regulating new

technologies to capture their full benefits?

Will shifts in power of technology create security concerns?

Will this Revolution be evenly spread or only serve to foster

greater inequalities and fragment societies?


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Business Model ImpactOf course, 4IR with its highly disruptive technologies and integration of the digital and physical worlds presents significant challenges and opportunities for businesses too. And in order to be in a position to fully benefit from the opportunities it brings, businesses must prepare the ground first. This means being awake to the possibilities and actively planning for the wider emergence of 4IR. It’s clear that such planning is already on many businesses’ agendas. According to a survey of 100 UK companies commissioned by Fitch Solutions in June 2019, two-thirds of businesses said 4IR already formed an important part of their strategic thinking. It’s also apparent that business appreciates both the scope and scale of the technologies encompassed; when asked what technologies they most associate with 4IR, the most common responses were AI, the IoT, Cloud, Big Data, 5G connectivity, automation, robotics and smart manufacturing (see Fig 5).

Fig 5: Survey Question: Select three terms that you associate with the Fourth

Industrial Revolution, with 1 being the most relevant and 3 the third most relevant.

Note: the scores attributed to each of the terms are worked out on the basis of 3 points being given each time a term was selected as the most relevant, 2 points given each time a term was selected as the second most relevant and 1 point given each time a term was selected as the third most relevant. Source: Fitch Solutions

Moving at SpeedThis reflects the fact that 4IR is moving at speed as a vanguard of technologies such as the IoT and AI are developing at an exponential rate, creating in the process a new era of digital business transformation and facilitating completely new kinds of products and services. Frontrunners are already beginning to separate themselves from the pack by using digital technologies and business processes to prioritise innovation. Yet, rather than trying to do everything themselves, many of the most successful companies are either considering or actively seeking partnerships in order to develop the new business models that will be crucial for success. Take the telecoms sector, for example. As operators lose their former dominance in the consumer market to the likes of Apple they are increasingly leveraging cloud and 5G, and targeting enterprises with a view to delivering new ICT services. Yet, if operators are to develop these new enterprise capabilities and revenue streams, they will first need to invest and form new partnerships. Such considerations are fraught with difficulties, however. Should they seek enhanced relationships with their existing vendors, many of which are moving into new areas such as AI and cloud? Or should they focus instead on a new set of vendors entirely, such as the increasingly dominant hyperscale cloud players like AWS and Microsoft Azure?

Exploiting OpportunitiesDespite these dilemmas, the World Economic Forum has already identified companies that are successfully exploiting opportunities based on 4IR technologies (see Fig 6). These organisations are using innovations such as AI to transform the nature of the work they do, in the process driving greater efficiencies while enhancing the work of human employees.


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Fig 6: Ahead of the gameCompany Sector Geography 4IR Implementation

Ford Automotive TurkeyDigital manufacturing and advanced automation to increase output without additional cost

Nokia Telecoms Finland5G to bring together design and production functions to introduce new products enabling enhanced productivity

Schneider ElectricEnergy Management / Industrial Automation

IndonesiaShare technology solutions with customers and partners enhancing operations

Geospatial Artificial Intelligence for Agriculture

Technology Australia

Cloud-based solution for vineyard identification using AI software and a satellite image library to plot every vineyard in the country, utilising the data to monitor crop conditions and fruit quality.

Source: Fitch Solutions

Just as many enterprises are embracing 4IR technologies, there are also a number of important initiatives taking place at a government level. Kenya, for example, plans to use blockchain to boost food security, tracking agricultural produce from seed to marketplace. However, preparedness for 4IR among countries is patchy too, with even such technologically advanced nations such as South Korea failing fully to prepare. Indeed, according to a recent analysis by the Korea Economic Research Institute (KERI), while many South Korean companies have added self-driving, unmanned aerial vehicles to their articles of association, they have been markedly slower to adopt other technologies including fintech, 3D printing and blockchain. Yet preparedness is all, and it will surely be those organisations and nations that put in the groundwork that benefit the most from this latest and most profound of industrial revolutions.

Looking AheadGauging precisely where we are in this latest revolution is not easy. But what’s clear is that, driven primarily by a desire to improve the efficiency of existing operations, 4IR technology is already being used to enhance discrete processes and sectors. At the same time, its use is somewhat piecemeal and sporadic still. IoT technology might be used to digitalise aspects of production or perform preventive maintenance, for example, while AI might be employed to identify medical problems and blockchain to facilitate the sharing of logistics records. Yet these applications, while undoubtedly useful, are only scratching the surface of what can be achieved. Within just a few years, the combination and concentration of these currently disparate technologies will surely lead to much more remarkable change, finally unlocking 4IR’s full potential.

It is highly likely, for example, that this evolution will see IoT platforms include blockchain for authentication, along with advanced analytics for trend analysis and ML for early event warning detection. And it won’t be long before we see the full realisation of cyber-physical production systems (CPPSs) – complex manufacturing systems that aim to integrate and synchronise machine world and manufacturing facility with the cyber computational space. Beyond this, the stage will be set for the creation of fully autonomous systems able to make decisions without any human involvement, presaging a truly revolutionary industrial era. In parallel, driven primarily by a desire to improve user experience, the emergence of technologies such as natural language processing, facial recognition and much smarter ML algorithms will surely also lead to a technological revolution in society, presaging highly significant changes to the way in which we react to one another.

Raising Questions

Inevitably, these developments raise a number of questions. Will the impact on society be entirely positive, or perceived as such? How will people react to the potentially much greater levels of data being held on them, and what will be the regulatory response? And, from a business perspective, which sectors will benefit the most and how will companies and consumers use these new technologies? Meanwhile, how will the various suppliers come together in order to provide more cohesive product offerings, and will this mean that the current technology giants – such as IBM, Google and Accenture – continue to dominate or will a whole new set of suppliers emerge? Beyond this, how will the technology develop further? The questions raised by 4IR are seemingly endless, yet an attempt will be made to address many of them in the following sections.


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Section 2: Market Demand4IR as part of company strategyBusinesses understand the potential impact of 4IR. There is a recognition from enterprises – large and small – that 4IR will herald new ways to serve customer needs, to encourage disruptive forces from agile and innovative competitors and to provide technology platforms that support a global, connected and sharing economy. This is a new business landscape in which all enterprises must participate. According to the results of a survey commissioned by Fitch Solutions in June 2019, 2 in 3 businesses in UK say that 4IR constitutes an important part of their company’s strategic direction. Furthermore, over 65% point specifically to the IoT, AI and 5G connectivity as being relevant to their 5-year strategies with Blockchain also significant to 55% of UK companies.

At the very heart of 4IR sit cyber-physical systems that with the help of IoT-based sensors, AI and Machine Learning (ML), can monitor a range of activities. Blockchain too can minimise friction and increase trust to speed up business processes. Many businesses now understand that IoT, AI and Blockchain are developing in tandem and are intrinsic to the emergence of 4IR.

Voice of UK business: what does 4IR mean to us?We asked 100 UK businesses for their views on how technology will shape their future processes and performance. The companies represented a variety of industries and sizes (see Figs 1-2).

Fig 1: Survey respondents by industry



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Fig 2: Survey respondents by company size


Just 12% of UK businesses thought 4IR was unimportant to their company’s strategy (see Fig 3). Government and education institutions were the most likely not to see the strategic importance of 4IR, and surprisingly financial services companies were more unequivocal about 4IR than other industries. It is possible that these institutions equate 4IR with smart manufacturing and automating processes only, which of course, would be less relevant to these sectors. The technology and consumer-facing retail sectors were the most likely to view 4IR as of strategic importance to their businesses. Later in the report we assess the importance of AI and Blockchain to the retail sector (see Chapter 3).

The larger the company the more likely it is that it will attribute a link between its strategic performance and the emergence of 4IR. Of course, Tier 1 companies will have more resource – in terms of skills and investment – to put towards technology development. Conversely, the smaller the company, the more likely it has other more immediate strategic priorities or indeed lacks both the necessary funds and skills to implement a forward-looking technology strategy.

Regardless of industry vertical or company size, businesses are increasingly looking to take advantage of data to improve their performance. As they seek to use AI and IoT to track performance and improve internal processes, every company will become at least partly dependent on technology. Whilst currently many businesses – and especially SMEs – will feel these 4IR technologies remain too new, too difficult and too expensive, they will soon understand that it is through the use of AI, IoT, Blockchain and other emerging technologies they can cut costs and then later develop new business models. This is the case for 4IR but before it can be really effective, different technologies must be interconnected and convergent. Until then any smarter service created will not really be smart.


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Fig 3: Survey Question: How important is 4IR as part of your company’s strategic

direction?


AI lies at the heart of 4IRWe have sought to define 4IR already in the report, but what about the view from the coalface? What does 4IR mean to the ICT decision makers we asked in the survey? They were asked to select terms that to them were most closely associated with 4IR: AI, IoT and cloud came out well on top (see Fig 4).

Fig 4: Technologies most associated with 4IR

Select three terms that you associate with the phrase Fourth Industrial

Revolution.

Note: Respondents were asked to select three technologies. Scores of 3 points were given to those technologies listed most relevant, 2 points to those selected second most relevant and 1 point to those selected third most relevant. Source: Fitch Solutions

2 in 3 businesses agreed that AI would be relevant to their company’s strategy over the next five years (see Fig 5). AI is the simulation of human intelligence by machines, encompassing processes such as learning, reasoning and self-correction, and businesses will use ML and predictive analytics more and more to improve their workflow management or trend analytics.

On the whole, businesses still fall short of implementing true AI-powered systems. The use of chatbots and other automated


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response systems in customer contact centres or systems designed to identify spam within email services is as far as many companies have utilised ML. The next development will be the use of predictive analytics as companies use algorithms to guide autonomous vehicles, carry out predictive maintenance on engines, conduct health screenings or predict the environmental impact on crop yields. This is why AI will be so important to companies from across multiple verticals over the next five years.

Fig 5: Technologies most relevant to company strategy

How relevant will the following technology trends be to your company’s strategic

direction over the next five years?

% of respondents saying relevant


There are four traits of AI that makes it so important to future 4IR strategies (see Fig 6).

Fig 6: AI Use Traits

Predictive: ability to predict future supply or demand

Efficient: ability to save costs through better use of resources

Flexible: offers the right approach for the desired outcome (Machine

Learning vs Predictive Analytics vs

Deep Learning etc)

Personalised: provides consumers with best possible bespoke product/

service


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A former senior executive at Amazon told us that the companies that are most likely to have long-term success over the next one or two decades are those that will be adaptable and most likely to embrace change and be prepared to innovate.

Data is pivotal to all adaptability. In order to innovate and embrace change, businesses must have a good understanding of the data assets they already have and how they can use them. This is the first stage of their data journey. Next, they should ascertain whether they should acquire data, which could be an internal exercise (consumer data). It is with this data that companies can become more efficient, plan for the future effectively and serve their customers in the most directly relevant way. This importance of data lies behind the referral to cloud as having an important association with 4IR – the cloud is the storage place for new data assets as they are created and tracked.

“The companies that are going to have long term success over the next 10, 15, 20 years are going to be those companies that are adaptable, embracing change and prepared to innovate. The use of data and AI will be at

the centre of decisions around R&D and innovation.”

Former senior executive, Amazon

Rather like AI, IoT will have an impact on businesses and society as a whole as it drives innovation across multiple sectors by allowing automated production and improving the efficiency of business operations. Whether its sensors are recording patient data in hospitals, detecting soil moisture on farms or enabling smart meters in consumers’ homes, the use of IoT is driving innovation. Again, according to our survey 2 in 3 businesses recognize the strategic importance of IoT and 5G (see Fig 5). Connectivity to 5G will be the crucial base for 4IR but this will only be in the longer-term: after all, despite years of discussion, 5G is still a new technology. The emergence of 5G networks will be especially important to the future IoT business model as they not only promise greater speeds but also the ability to connect a greater number of smart devices simultaneously.

Fig 7: Readiness to benefit from technologies

How ready is your organisation to benefit from these technology trends?

% of respondents saying ready


There is a notable disparity between the number of companies that understand the potential strategic value of AI compared with those that admit to being ready to use it (see Fig 7). AI is a fragmented marketplace which in turn makes it costly for enterprises. There may be an appreciation of the importance of AI but it will take time for companies to put in place a plan for AI and how they are going to use it.

Conversely, 6 out of 10 respondents say they are ready to benefit from 5G. The list of potential benefits of 5G connectivity are relatively clear: it allows for a huge number of connections, offers high speeds, lower latency and allows for network slicing which enables the network to be customised, giving businesses more control and flexibility.


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Businesses are ready to make the leapWhilst only 1 in 4 businesses say they are actually implementing a 4IR plan, a third say they are undergoing strategic discussions as to how 4IR should be best implemented (see Fig 8). This does leave 40% of businesses that are either unclear as to how 4IR can impact their day-to-day business or do not see 4IR as having an immediate impact on their business (see Fig 8). Most likely to have an implementation plan for 4IR or at least undergoing strategic discussions on how they should implement 4IR technologies are technology companies (as one would expect and hope), followed by retailers and consumer facing enterprises and manufacturing firms. Those companies that are serious about implementing 4IR are most likely to be ready to embrace the use of automation and data, which they hope will make them more productive. Sixty percent of UK businesses expect to implement 4IR in their working practices within 24 months.

Fig 8: Impact of 4IR

% of respondents selecting each response


What is holding some companies back? A mix of reasons is the answer but it is interesting to see that only half say a lack of skills or lack of funds are proving to be obstacles (see Fig 9). Businesses instead are struggling to justify the business case for implementing 4IR technologies ahead of other strategic priorities. This is an internal issue with CTOs, CIOs and digital officers needing to do better jobs in building up internal cases, but when 57% of ICT decision makers admit to a lack of clarity on 4IR, the problem is clear. Technology companies themselves need to do a better job in explaining the potential benefits of 4IR technologies. Showcasing how the likes of AI, IoT and Blockchain can impact company performance is central to this mission.

Fig 9: Obstacles to 4IR

What are the obstacles preventing you from implementing a 4IR strategy?



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Customers, reducing costs and new revenues drive company performanceBetter customer engagement, cost reduction and adding new revenues all trump R&D as factors by which to measure an improved company performance, according to UK businesses (see Fig 10). This suggests innovation that serves to improve any of the above is what companies need to prioritise. The success of 4IR technologies depends on the ability to match their benefits with these attributes.

AI directly touches customer engagement with the emergence of chatbots and virtual assistants, and going deeper than this allows businesses to understand their customers better through data that is gathered and analysed. The abundance of data should lead to more personalised engagement with customers. AI also supports business agility: through use of predictive analytics, firms should be able to project future supply and demand and as a result make better use of its resources.

Fig 10: Important factors for improving company performance

How important are these factors to improving your company’s performance

over the next 5 years?


In spite of the apparent match between business factors deemed important and the attributes of AI, it is a little surprising to see big data and ML – important constituents of AI – relatively low down the investment priority lists of UK companies (see Fig 11).

Fig 11: Areas of investment

In which of these areas are you investing in most heavily?



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UK companies are most likely to invest most heavily on cybersecurity. With businesses holding so much sensitive data about their customers and their own operations, it is right that companies perceive the risk of security being breached as so potentially impactful. This risk will only get bigger. Data will become far more abundant and will be used not just to store information but to drive day-to-day processes and future business models. This will make the data in the hands of companies more sensitive, more strategic and more valuable.

Another area of heavy investment is IoT, which will support the move to intelligent factories that will leverage sensor-based IoT systems to detect temperature, humidity, noise, light and vibrations, and will track the location of vehicles and equipment, and help manage complex supply chains. It will be the automation of a series of processes (maximizing current resources, processing real-time data and tracking objects across the supply chain) enabled by IoT that will support smart manufacturing, which in turn will reduce costs and drive revenues.

Use of technology as a disruptive influenceWhat is abundantly clear is that technology will increasingly play a role as an instrument of change in future business models. Four in five businesses agree that technology and innovation is changing their competitive landscape, significantly more than those that say consumer patterns, regulations and the low carbon economy will be drivers of change (see Fig 12).

Fig 12: Competitive landscape drivers of change

What is driving change in your sector’s competitive landscape?


The rest of this report will assess some specific use cases on how specific industries will use technology for change (mining, manufacturing, retail – Chapter 3) and explore the value chain that will support these new business models (Chapter 4). The government too will have a role to play to encourage and facilitate the more widespread use of 4IR technologies (Chapter 5).

What is clear from this survey is that businesses from across a variety of industries recognize technology will power change and will deal with many of the challenges facing enterprises today (see Fig 13).


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Fig 13: 4IR will drive new business cases from multiple industriesSector Technology Use Case

Power IoT / SensorsSensors attached to turbine blades on wind farms helping to adjust blade angle and take advantage of change in wind direction

Agriculture AI / Computer VisionSmart farm systems including “See & Spray” technology to detect individual plants and apply herbicide to the weeds only

Banking AI / Machine Learning Proactive detection and prevention of known and unknown cyberattacksHealthcare Blockchain Safe access to non-patient-identifiable datasets crucial for medical research

Utilities BlockchainDevelopment of a P2P charging marketplace for electric vehicles to address the limitations of public charging infrastructure


Smart manufacturing to improve industrial processesThe digitisation of manufacturing lies at the heart of 4IR. The emergence of smart and autonomous systems galvanised by data and ML will improve industrial processes. Because of this, we delved even more closely into the manufacturing sector and conducted a follow-up survey in partnership with TWI, a technology and research association for the engineering and manufacturing industries. The focus of this survey of 33 TWI members was to explore the readiness of the manufacturing sector to adopt 4IR technologies, to understand which technologies are most useful to them and from whom they expect to buy 4IR solutions.

It is unsurprising – and perhaps something of a relief – to be able to confirm that smart manufacturing was seen as the most relevant 4IR technology, just ahead of AI and IoT (see Fig 14). What is more revealing is that just five respondents felt Blockchain was relevant to their strategic direction. We view things a little differently. Blockchain can deliver a real-time view of global supply chains and can document a full audit for which regulatory requirements have been met on a product’s journey. A combination of IoT and Blockchain can improve product safety, track and traceability, warranty management and repair processes.

When asked specifically about how they are using IoT, 86% responded they are already or considering implementing some type of automation or robotics. Over 70% are already using or thinking about using IoT to support predictive maintenance or tracking processes. Only half, however, are either using or considering using IoT to improve their logistics.

Fig 14: Most relevant technology trends for manufacturers

How relevant will the following technology trends be to your company’s strategic

direction over the next five years? Use a scale of 1-5, where 5 is very relevant and

1 is not relevant at all?



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There may be an overall recognition of the relevance of 4IR technologies, but the picture is a little more hazy when manufacturers are asked about their readiness to embrace 4IR. Most are cautious, giving a response somewhere between “very ready” and “not ready at all”. It is instructive to look at the outliers and assess for which technologies manufacturers are either very ready or not ready at all (see Fig 15). Many more admit to a failure of preparation, especially for Blockchain and fintech. We can forgive on fintech but we feel there should be more of a focus on preparation for Blockchain, but for this there needs to be a clearer understanding of its relevance. Overall our respondents feel ready for smart manufacturing processes, but it is a concern to see the state of readiness for important technologies, such as connected vehicles, augmented and virtual reality, AI and IoT.

Fig 15: Readiness for 4IR, by technology type

How ready is you organisation to benefit from these technologies. Use of a scale

of 1-5 where 5 is very ready and 1 is not ready at all.


Whilst only 15% of the respondents could claim they are implementing a specific strategic plan for 4IR, at least half are undergoing discussions on how to implement such a plan. One in five admit 4IR is not currently on their radar but may become so in the next 2-3 years.

What is stopping more manufacturers from implementing 4IR technology strategies? The simple answer is talent. Or to be more precise the apparent lack of access to people with the right skills (see Fig 16). Lack of funds is also an issue as are other strategic priorities. Technology providers need to play a role here in supporting their customers where there is a lack of internal expertise and in being clear as to what value technologies such as AI, IoT and Blockchain can bring to fulfilling specific business outcomes.


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Fig 16: Obstacles to 4IR implementation

What are the obstacles preventing you from implementing Industry 4.0 strategy to

your company? Using a scale of 1-5 show the extent to which each is an obstacle

with 5 showing a very serious obstacle and 1 showing there is no obstacle at all


On which partners to work with to implement 4IR strategies, manufacturers are most likely to engage with IT and software vendors, engineering services companies and system integrators. Most interesting is the finding that less than half the respondents were working with (or expected to work with) cloud service providers. Perhaps this answers why so few manufacturers are ready to benefit from AI (see Fig 15). Telecoms operators are even more unlikely to be a manufacturer’s chosen vendor, which again may be a reason why manufacturers appear unready to benefit from IoT (see Fig 15).

The vast majority of 4IR services will involve the delivery of services and capabilities in the public cloud and telecoms operators control the connectivity over which many of these services will be provided, so the reality is that cloud service providers and telecoms operators fulfil a hugely important role in the 4IR value chain. It is more likely that what our manufacturer respondents are telling us is that they expect these vendors to sit further down the supply chain with their products or services integrated into solutions that manufacturers will buy from IT vendors, engineering services or system integrators. Indeed, half the respondents to our survey told us that they would expect to create 4IR capabilities by acquiring and integrating solutions from a range of providers and a third said they would only ever consider telecoms operators to deliver the connectivity part of a 4IR solution. It is interesting to note that just a quarter said their preference was to buy a service from a single solution provider. The value chain for 4IR services is complex and fragmented, and it is imperative that technology providers are able to work together to fulfil the transformative needs of their customers.


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Fig 17: Most likely 4IR partners for manufacturing firms

What type of companies are you working with, or would you expect to work with,

to drive forwards 4IR initiatives?



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Section 3: Technology Use CasesManufacturing: IoT & BlockchainAs a result of its especially strong links to 4IR, the transformation taking place within the manufacturing sector is likely to be profound. At the heart of this transformation is the IoT, which is gaining a role in everything from automating production to improving the efficiency of business operations. Indeed, as we move steadily towards the digital transformation of manufacturing, the Industrial IoT (IIoT) is likely before long to ensure that intelligent factories become the norm rather than the exception.

Fig 1: Use of IoT and Blockchain in smart manufacturingManufacturing Use Case TechnologyEnabling smart factories IoTAsset tracking IoTManaging warehouses and inventories IoTRegaining control of production IoT, Machine LearningSupply chain management IoT, BlockchainEstablishing ethical accountability BlockchainPreventing counterfeit parts BlockchainEnabling smart contracts Blockchain

IoT: Monitoring, Tracking, ControllingIoT devices are already tracking and tracing inventories on a global scale, monitoring supply chains in order to provide meaningful estimates of available resources. Specific use cases in the manufacturing sector include the deployment of IoT-enabled cameras to spot defects and reject faulty products, and food retailers monitoring the temperature and humidity of goods in storage in order to ensure they reach stores in optimum condition. This remote monitoring of equipment and operations, along with asset tracking and quality control, are assuming growing importance and some of the world’s largest manufacturers, such as GE, Siemens, Schneider Electric, ABB, Rockwell Automation, Honeywell, Bosch, and Hitachi are investing heavily in smart factories globally.

IoT: Improving Production FlowThe IIoT is also ideally placed to enhance manufacturers’ production systems, improving flow within plants based on its ability to automatically monitor development cycles and manage inventories. To date, the technology’s deployment in this area has tended to be driven by the inevitability of production problems and equipment failures, and the extensive cost and time associated with resolving these issues. And by combining the IIoT and ML, it becomes possible to create self-healing automated systems capable of intelligently regaining control following production downtime.

Blockchain: Tracking and Tracing InventoriesBlockchain too is assuming a high degree of importance in the manufacturing sector. The technology can deliver a granular and real-time view of global supply chains, while documenting a chain of custody for products in order to establish that regulatory requirements have been met. It is also able to expedite troubleshooting in the event of part failures or product recalls. And whether it is applied to strategic sourcing, procurement or machine-level monitoring and service, the technology is capable of enabling a host of new manufacturing business models. By combining Blockchain with the IoT, for example, it is possible to radically improve processes including product safety, track and traceability, warranty management and maintenance, repair and overhaul, leading to a host of new usage-based business models.


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For example, sensibly deployed, Blockchain can help facilitate a much faster response to product recalls and aid risk-averse industries in preventing counterfeit parts from entering supply chains; the technology is capable of providing a real-time audit trail for all transactions secured against modifications, making it especially suited to audit and compliance-intensive industries. Such track and trace capability is already proving popular with manufacturers, ensuring that companies competing in highly regulated industries, including aerospace, defence and medical devices, are well positioned for new regulatory compliance requirements. In addition, Blockchain can help facilitate a more secure and legally binding way of drawing up agreements between partners – so-called smart contracts – within complex supply chains.

Blockchain: Sharing Data, SecurelyBlockchain also has a role to play when it comes to the sharing of data between partners. Already companies such as OriginTrail, which aims to bring trusted data sharing to global supply chains by utilising Blockchain technology, are enabling product information to be exchanged across multiple company supply chains, with sensitive data encrypted for security. Meanwhile, GE Research is exploring the transmission of 3D designs using Blockchain to ensure designs are not altered in transit, and a number of organisations are collaborating on the use of 4IR technologies to increase production efficiency and quality. Starting in Spring 2020, for example, leading Japanese manufacturing companies – including Mitsubishi Electronics, Hitachi and Yaskawa Electric – will start sharing data using Blockchain in an effort to enhance competitiveness and production quality.

Blockchain: Establishing Ethical AccountabilityThe technology can also be used to open up supply chains to greater scrutiny, helping to establish ethical accountability. Indeed, tech giant Apple recently revealed its interest in Blockchain as a means of avoiding ‘conflict minerals’, which directly or indirectly finance armed conflict or benefit armed groups, in order to ensure responsible sourcing across its supply chain. Similarly, Nestlé, the world’s largest food manufacturer, is investing in a form of supply chain transparency through a collaboration with OpenSC, a Blockchain platform that allows consumers to track their food back to its source.

Blockchain: Driving Car IdentitiesBlockchain is becoming firmly established in the car industry too, aided by industry collaborations such as the Mobility Open Blockchain Initiative (MOBI), which is backed by leader manufacturers with the aim of building a vehicle digital identity prototype or car passport that can track and secure a vehicle’s odometer and relevant data on distributed ledgers. Meanwhile, BMW is piloting a Blockchain platform of its own in order to track mileage in leased vehicles.

Mercedes-Benz Cars is one of a number of auto manufacturers experimenting with Blockchain technology. In March 2019, Mercedes and enterprise contract management solution provider Icertis entered into a partnership designed to enable a consistent documentation of contracts in the supply chain. The car maker already required its direct suppliers to pass on and control standards and contractual obligations with regard to working conditions, human rights, environmental protection, safety, business ethics and compliance, and with the launch of its Blockchain prototype a more transparent mapping and understanding of this requirement was enacted across the entire supply chain. As a direct result of the project, the disclosure and confirmation of these sustainability requirements can be traced by all participants in the chain, boosting credibility and transparency in the process.

The project also ensures global procurement and contractual practices meet the requirements of parent company Daimler AG by creating trust in the integrity of the supply chain without revealing competitor information. Indeed, according to Sabine Angermann, Head of Purchasing and Supplier Quality for Raw Materials and Strategy at Mercedes-Benz Cars, “The transmission of contracts to each member of the supply chain is the prerequisite of cooperation with our suppliers, especially in terms of sustainability and ethical conduct. The Blockchain prototype opens up completely new ways to make purchasing processes simpler and safer.”


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Mining: AI & IoTMining is another industrial sector set to be transformed by 4IR technologies. Already, companies including Rio Tinto are creating fully intelligent mining operations, while others are making use of AI and the IoT in discrete areas of their operations in order to improve productivity or safety. This is not surprising; combined, these technologies bring the ability to comprehensively analyse environmental and equipment data and to carry out real-time risk and area assessments, transforming mining into a fully data-driven industry.

Fig 2: Use of IoT and AI in smart miningMining Use Case TechnologyDetermining best areas for exploration AIPlanning mine layouts and vehicle paths AIImproving metals processing methods AIAutomating trucks and drills AIEquipment monitoring and maintenance IoT, AIEnsuring optimal airflow and ventilation IoTTracking workers’ location and biometrics IoT

AI: Making Predictions, Providing RecommendationsOf course, mining operations can be extremely expensive with very considerable potential for waste due to inefficiency. Deciding where to establish mining operations has huge cost implications, and by using vast amounts of data inputs – such as drilling reports and geological surveys – AI and ML can help make predictions and provide recommendations on exploration, resulting in a more efficient process with higher-yield results. Vancouver-based gold producer Goldcorp, for example, has utilised IBM Watson’s cognitive technology to analyse vast amounts of data in order to determine the best areas for exploration, while specialist technology companies such as Kore Geosystems and Goldspot Discoveries are focusing on improving exploration methods through the use of AI and the analysis of extremely large data sets in order to reveal patterns, trends and associations.

In November 2018, IBM Canada and Goldcorp announced the co-creation of an AI product designed to improve predictability for gold mineralisation. The solution, which went into use in 2019, was developed using data from Goldcorp’s Red Lake Gold Mines in northern Ontario. Leveraging spatial analytics, ML and predictive models, IBM Exploration with Watson is designed to help explorers locate key information and develop geological extrapolations in a fraction of the time of traditional methods. At Red Lake, the solution provided independent support to drill targets planned by geologists via traditional methods while also proposing new targets; following drilling of these new targets, initial results yielded the predicted mineralisation at the expected depth. Such is the value of the technology that according to Todd White, Goldcorp’s Executive Vice President and Chief Operating Officer, it “has the potential to drive a step-change in the pace of value growth in the industry.”

IBM’s analytics platform had already proven itself in the oil and gas industry, prompting its use in the mining sector. Starting in 2017, a number of Watson services were used to analyse vast amounts of data – from drilling reports to geological survey information – in order to help geologists determine specific areas to explore, reach high-value exploration targets faster, calculate geological models with more certainty and interpret the growing volume of data. In essence, the plan was to improve the ability of geologists to gain new information from existing data and deliver regionalised insights, aims that have now been comfortably met.


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IoT: Efficiency from the OutsetConsiderable savings can also be made by ensuring mine layouts and vehicle paths are planned efficiently from the outset. And through the use of sensors on systems used to monitor this equipment, mining companies are able to discover more cost-efficient ways of running their operations, improving productivity in the process. Glencore’s Matagami Zinc mine in Canada, for example, uses digital sensor company Newtrax’s Mobile Equipment Telemetry solution to extract essential data for asset tracking and safety purposes, while a recent partnership between IBM and equipment manufacturer Sandvik Mining & Rock Technology saw Watson IoT technology embedded into mining equipment in order to improve management and maintenance.

Fig 3: Technology uses for mining


AI: Environmental BenefitsIn addition, AI-powered predictive models enable mining companies to improve their metals processing methods through the use of more accurate and less environmentally damaging techniques. Predictive analytics can also be used for the automation of trucks and drills, ensuring significant cost and safety benefits; BHP Billiton uses an AI system to schedule and dispatch driverless trains carrying iron ore from Australian mines to Port Hedland, reducing cancellations due to congestion while increasing the number of trains that can be run. Meanwhile, Anglo-Australian mining company Rio Tinto plans to create an ‘intelligent’ mine in Australia by 2021 in which all assets are networked together and capable of making near instantaneous autonomous decisions. The plan envisages connecting all components of the dynamic schedule, from the customer to orebody planning, in addition to automated trucks, drills and trains.

IoT technology can also be used to improve the safety of mine workers by using sensors to ensure that airflow and ventilation are kept to optimal levels. Likewise, sensors and big data can be used to track workers, potentially speeding up search and rescue operations in the event of an accident. Indeed, the IoT is enabling body-mounted wearables that can track not only location but also biometrics such as heart rate, brain activity and even body temperature. Guardhat, for example, utilises sensors within its safety helmets to detect how and where a worker is operating, and whether it is safe to do so.

Connectivity: Private Networks Gaining TractionHowever, while the IoT and AI bring many benefits to the mining industry, the use of these technologies is dependent on availability of wireless Internet in remote and, in many cases, underground environments where connectivity is often either limited or unreliable. These remote locations may struggle to pick up 3G/4G signals from public mobile networks, while underground mines may experience only intermittent Wi-Fi signals due to the nature of the mine construction. This connectivity problem is particularly acute in markets where Wi-Fi access is limited due to a lack of supporting infrastructure, such as in certain parts of Sub-Saharan Africa and, to a lesser extent, Asia and Latin America.


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Given these constraints, the use of private networks in the mining sector is gaining significant traction, highlighting its wider role as a critical form of communications for 4IR. Telco equipment giant Ericsson, for example, is working with systems integrator Ambra Solutions to sell private LTE and 5G networks to mining companies worldwide, enabling mining operators to automate ventilation systems, track personnel and vehicles and remotely control machinery such as trucks and other equipment. Mobile and wireline network operators are also rolling out low power wide area networks (LP-WANs) based on high-capacity small cell base stations operating in unlicensed spectrum bands to interconnect a myriad of devices. LoRa (long range) IoT solutions provider Semtech reports growing usage of its products by mining companies such as Transco Industries at the extraction/conveyor belt level, while Australian telecoms operator Telstra has been promoting Sigfox-based IoT offerings to mining companies through its Thinxtra division. Indeed, with strong connectivity at its heart, there’s every sign that 4IR will lead to the transformation of the mining sector, with more efficient operations, increased automation and a considerably safer working environment.

Retail: AI and BlockchainRetail is another sector set to be transformed by 4IR technologies. Retailers are already using increasingly sophisticated analytics in order to boost sales, drive business efficiency and meet the demands of their customers. By gathering and processing data on their customers, businesses gain insights into their preferences and buying patterns, enabling them to present each with a personalised experience. The technology is also able to make informed predictions about how consumers will behave, which goes some way to explaining why Amazon is deploying it so extensively, including via its Amazon Echo intelligent voice service, Alexa.

Fig 4: Use of AI and Blockchain in retailRetail Use Case TechnologyPredicting how consumers will behave AIEngaging customers via chatbots AIPersonalising recommendations AIVirtual racks and changing rooms AICoordinating warehouse robots AIReducing supply chain costs and risks BlockchainEnsuring product quality and traceability BlockchainProviding alternative payment methods BlockchainEnhancing customer loyalty programmes BlockchainSpeeding up returns and refunds Blockchain

AI: Getting PersonalThe use of AI starts even before customers even step into a store; AI-powered chatbots allow retailers to engage customers efficiently by handling thousands of queries simultaneously without the need to employ a large workforce. The technology can also be used to help customers find what they’re looking in ways that would have been impossible a few years ago. Luxury department store Neiman Marcus, for example, enables customers to search its inventory using their own photos in order to find the same or a similar item. Once customers enter a store, AI can then be deployed to narrow down choices and personalise the shopping experience; outdoor company North Face, for example, uses IBM Watson’s cognitive computing technology to understand where potential customers will wear its coats and what they’ll be doing in order to make highly personalised recommendations. Meanwhile, clothing company Uniqlo is combining AI and neuroscience to make personalised recommendations based on measuring customer reactions.


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AI: Virtual Changing Rooms & PaymentsAI technology can also be used to create virtual racks and changing rooms, allowing customers to see instantly how an item of clothing would look. And by using gesture and touch-based interfaces, shoppers can mix and match various outfits and accessories in order to complete the look. For example, luxury fashion e-tailer Farfetch uses technology within its ‘Store of the Future’ platform to link online and offline channels. In the fitting room, smart mirrors enable shoppers to request different sizes, colours or items, and the customer’s information and shopping habits are then stored in Farfetch’s database.

AI technology is also being used to facilitate in-store payments. The Amazon Go concept, for example, allows customers to simply walk into its stores, select what they want from shelves and then walk out without paying. Instead, AI-enabled in-store sensors and cameras track what customers purchase, and their Amazon account is then charged when they leave. Meanwhile, retail technology company Ocado is using AI to coordinate the movement of robots in its automated warehouses. Algorithms are also being deployed after purchases have been made. Clothing company H&M, for example, is using AI to analyse store receipts and returns as part of efforts to help stores understand which items ought to be promoted and what stocks should be held in each location.

Blockchain: Building Customer TrustBlockchain is playing an increasingly important role in retail in order to reduce supply chain costs and risks, locate financing and ensure the quality and traceability of products. Indeed, given growing consumer interest in the origins of what they consume, it is surely unsurprising that many retailers are now using the technology to verify the origin and traceability of goods, ensuring brand promises are fulfilled. By recording the product’s journey on an immutable ledger and offering an interface enabling customers to obtain a clear picture of its origins, retailers are able to build trust with their customers. Tracking of this kind also brings health benefits to consumers by enhancing the ability of stores to quickly identify and remove dangerous and otherwise recalled products. Such considerations surely lie behind the success of the IBM Food Trust initiative, which offers its members a Blockchain-based platform to track produce at every stage of the supply chain. The initiative, which launched in 2016, is used by large retailers including Walmart, Unilever, Nestlé and Carrefour.

Carrefour’s use of Blockchain to help consumers trace the source of its milk products is enabled by QR codes on its packaging that can be scanned to access an array of information on the product’s provenance. Using the technology, consumers are able to see the GPS coordinates of farmers whose animals’ milk was collected, gain information about the cows’ feeds, find out exactly when the milk was collected and where it was packaged. Transactions are endorsed by multiple parties, leading to an immutable single version of the truth.

This sharing of information about food origin, processing and shipping information is enabled by the IBM Food Trust, which uses a decentralised Blockchain model to allow multiple participating members of the food supply chain – from growers to suppliers to retailers – to share information on a permissioned Blockchain network, ensuring the data is fully trusted. Carrefour joined the Trust in 2018 in order to strengthen its food excellence actions, and the company plans to expand the technology to all of its brands worldwide by 2022, making it easier to prevent the spread of pathogens such as E.coli and salmonella by using Blockchain to trace the precise origin of each product. Such is the project’s success that according to Laurent Vallée, Carrefour’s General Secretary, the platform represents “a great opportunity for Carrefour to accelerate and widen the integration of Blockchain technology to our products in order to provide our clients with safe and undoubted traceability.”


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Blockchain: Payment and LoyaltyIn addition, Blockchain can be used to offer a safer alternative to traditional payment methods based on the use of cryptographic keys, which restrict access to authorised individuals. Meanwhile, the technology’s ability to transmit not only monetary value but identity-related data could eventually see Blockchain used to combine payment, identity verification and the earning of reward points in a single transaction. Already retailers are eyeing Blockchain technology for use in customer loyalty programmes, many of which currently rely on relatively insecure systems. Yet, by using Blockchain for these programmes, hackers and fraudsters are likely to find it much harder to penetrate the system due to the fact it relies on a distributed ledger rather than a store’s centralised database.

There are significant benefits too in terms of consumer value as a token-based rewards ecosystem can be opened up to third-party businesses. American Express, for example, has already integrated Hyperledger-developed Blockchain technology to help merchants design customised offers for AmEx cardholders and increase customer engagement. In addition, by putting a Blockchain data-sharing system in place, customers would be able to let retailers know about their needs and preferences, for example by sending shopping lists to retailers in the form of smart contracts. Meanwhile, with its ability to automatically produce digital transaction records of transactions, Blockchain can also be used to speed up returns and refund operations, ensuring retailers no longer need to store data themselves.


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Section 4: 4IR Supply ChainUnderstanding the breadth of the 4IR ecosystemFrom a supplier perspective, everything is still to play for when it comes to delivering 4IR solutions to enterprises. Frankly, it is a confusing picture for an enterprise seeking to set up a specific 4IR implementation plan. According to our survey of UK businesses, traditional IT companies are by far the most likely partners.

Fig 1: Supply chain partners

What type of companies are you working with to drive 4IR initiatives?


It is interesting to break down these findings further and assess the most likely type of enterprise to work with each part of the supply chain (see Fig 2).

Fig 2: Who works with who?Supply Chain Type Industry PartnerIT Company Government; Pharmaceuticals & Healthcare; Consumer & RetailTechnology vendor Consumer & Retail; Manufacturing; Financial ServicesHardware provider Consumer & Retail; ManufacturingSystem integrator Education; ManufacturingConsulting (Professional services) Government; Financial ServicesTelecoms service enabler Manufacturing; EducationSource: Fitch Solutions

The IT services landscape has changed considerably with the advent of cloud computing. Traditional IT hardware and IT software suppliers now compete with dedicated cloud specialists. Meanwhile, telecoms operators are forging new strategies in the provision of IT services and building their own competence in cloud computing and systems integration.

The table below (see Fig 3) highlights the six different categories of companies serving the emerging 4IR marketplace. Throughout this chapter we refer to a series of companies operating across IoT, AI and Blockchain technologies. This is not a comprehensive listing and does not set out to be, but gives examples of the type of companies that enable these technologies.


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Fig 3: Who’s who in 4IR supply chain?Company type Examples Notes

Traditional IT hardware and software vendors

HPE, Fujitsu, Siemens, Schneider Electric

These companies are having to both move their technology into the cloud and develop new products, services and business models to compete in 4IR.

Systems IntegratorsInfosys, Tech Mahindra, IBM, Accenture, Mieschke Hofmann und Partner (automotive, Germany)

SIs are rapidly building up their expertise in areas such as AI and Blockchain. The SI and professional services market is large and complex, with global, local and vertically-focussed firms.

Specialist technology / start-upsDataiku (AI), HEALTH[at]SCALE Technologies (AI in healthcare), Particle (IoT)

4IR is seeing the emergence of new, well-funded starts ups providing either horizontal or vertical-market-specific capabilities.

Public cloud service provider Amazon Web Services, Microsoft (Azure), Google

In addition to their expertise in platforms, infrastructure and software, these global giants are investing in areas such as the connected car. Furthermore they are dominating in the recruitment of AI skills.

Telecoms operators AT&T, China Mobile, Deutsche Telekom

In addition to providing connectivity which underpins all 4IR capabilities, telecoms operators are seeking to become vertical market specialists (eg Verizon in fleet telematics) and systems integrators.

Vertical-market hardware, software and non-technology vendors

Cargill (agri-chemicals), John Deere (tractors), Caterpillar (mining)

Many vertical market specialists are already committing to big investments in areas such as IoT and AI.

While the market for public cloud services is becoming global, the IT hardware, software and services landscape is populated by both global and national providers, some of which are vertical-specific, and others which sell their products and services across many different verticals. And as capabilities such as the IoT become embedded in a whole range of new products, services and internal capabilities, the landscape will become even more complex and multi-layered. Companies which have never seen themselves as providers of IT services will need to embrace IT in the future if they are to continue to prosper.

Fig 4: Expertise mapping in IR4 supply chain



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In the table below (see Fig 5), we explore the opportunities and challenges for each type of company in the value chain. What is clear is that there is a place for all six of these groups of suppliers:

• Telecoms operators can leverage their emerging 5G capabilities and, increasingly, the new software functionality embedded in their network/IT systems.

• Public cloud service providers have financial muscle, expertise across disruptive technologies such as AI and Blockchain and offer global service delivery.

• System integrators have deep enterprise consulting relationships and are seen as strong partners, while also retaining the ability to work with smaller specialists for specific technology expertise.

• Traditional IT vendors are well known to many enterprises and will increasingly embed IoT connectivity as part of their service provision, while using cloud and digital capabilities to reduce delivery costs.

• Start-ups will offer disruption around specific technologies or products, and partner with larger suppliers who need to bolster their expertise in specific areas.

• Vertical market specialists will offer services that are directly relevant to certain enterprises, and launch new services based on the most up-to-date and relevant use cases.

Fig 5: Strengths & weaknesses within 4IR supply chainCompany Type Strengths/Opportunities Weaknesses/Challenges

Telecoms operators

• Local presence /market knowledge

• Long-standing relationships with enterprises

• Connectivity expertise

• Existing partnerships with tech suppliers and SIs

• Can leverage new software functionality in network/IT systems

• Will be able to leverage 5G capabilities (low latency connectivity and IoT)

• Lack of specialist skills (cloud, system integration, consulting)

• Fragmented business and technology capabilities

• Inability to provide global services

• Facing commoditisation of connectivity from competition with cloud providers and new service providers

Public cloud providers

• Financial muscle

• Expertise in cloud, software, AI, quantum computing, Blockchain

• Global service delivery (range of SaaS, IaaS, PaaS to enterprises)

• Building connectivity capability through use of unlicensed spectrum

• Building edge computing capabilities

• Lack local account management

• Lack system integration/consulting skills

• No services available in some markets (where there is no local cloud presence)

• Any privacy/security issues could erode business confidence locally

System integrators

• Vertical market expertise

• Consulting skills

• Local presence, market knowledge and long-standing enterprise relationships

• Can partner with start-ups and specialists – large enterprises want to work with one rather than many suppliers

• Building expertise in specific new technologies

• Expensive (high cost base)

• Lack of software expertise

• Face competition from other players building up consulting capabilities (telecoms operators, IT vendors)

• Risk of disintermediation from platform-based business models

• Many enterprises looking to reduce consulting costs


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Fig 5: Strengths & weaknesses within 4IR supply chainCompany Type Strengths/Opportunities Weaknesses/Challenges

Traditional IT vendors

• IT expertise across verticals

• Global presence

• Delivering new products and services by embedding connectivity (IoT)

• Use of cloud and digital capabilities to reduce delivery cost

• Legacy products and services at risk of disruption from cloud and platform-based business models

• Expensive (high cost base)

• Lack of experience in digital ecosystems

• Any delays in embracing cloud computing will lead to losing business to cloud vendors

• Risk in losing best talent to cloud companies/SIs who may offer more attractive opportunities

Start-ups

• Focus on specific technology or product

• Free to experiment and innovate (no pressure from shareholders)

• Could partner with larger suppliers to increase exposure and reach

• Potential sale to cloud or IT vendor

• Lack of sales and marketing muscle

• Inability to be a global player

• Inability to do business directly with large enterprises (lengthy procurement)

• Rapidly evolving technology landscape means products/services may be disrupted by larger players

Vertical market specialists

• Deep understanding of specific market requirements means they can launch new services based on specific use case

• Scope to expand to IoT service provision

• Partnership potential with service providers to deliver new products

• No reach outside specific vertical

• Little financial muscle compared to IT/cloud vendors

• Dependent on partnerships to develop new technology capabilities

• Rapidly evolving technology landscape means products/services may be disrupted by larger players

Dominant players in technology provider ecosystemAcross a range of 4IR technologies, it’s apparent that many of the same large companies tend to dominate. Yet it’s clear that much of the recent expansion within the 4IR supply chain is based on partnerships, with space often for smaller, niche suppliers. This is perhaps not surprising given that technologies like the IoT and Blockchain lend themselves to collaboration on the basis that building the necessary ecosystem involves a complex series of interactions between multiple organisations. Many large suppliers have embraced this ecosystem mentality by opening up their IoT platforms to partners. For example, Cisco has a comprehensive suite of IoT products, solutions and services, providing tools for everything from connectivity and security through to automation and insights. Indeed, this portfolio is designed with partnerships in mind and based on architectures and open standards that integrate with third-party and legacy equipment.

The table below (see Fig 6), while not intending to be comprehensive, provides an overview of the kinds of companies operating across the value chain for the IoT, AI and Blockchain. The extent to which many companies have substantive offerings in multiple categories is striking. Cisco and HPE are among the traditional hardware and software providers with strong solution sets in each area, while IBM not only has highly credible IoT, AI and Blockchain products but is also a leading SI. Meanwhile, the hyperscale cloud providers too have extensive and growing offerings across all three areas, easing the process of deploying and managing complex technologies for enterprises globally.

There are also a number of specialist providers which focus on particular markets. PTC’s ThingWorx, for example, concentrates on industrial IoT (IIoT) use cases, while H2O.ai specialises in open source ML and AI platforms. In addition, there are several noteworthy vertical market hardware, software and non-technology vendors operating across the value chain. Both GE and Bosch, for example, are active in the IoT sector via their Predix Platform and IoT Suite, respectively. Both are also applying AI and Blockchain to their solution sets in order to enhance their appeal to enterprises.


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Fig 6: Mapping technologies to technology playersCOMPANY IOT AI BLOCKCHAIN Traditional IT hardware, software vendors

CiscoIoT networking, gateway, operations management, data management, security solutions

ML, AI solutions for networking, collaboration, security, IoT, data centre

Enterprise Blockchain technology

HPEIoT infrastructure, apps and security solutions

BlueData software; HPE ML Ops; Apollo 6500 Gen10 server-based deep learning platform; MapR

Enterprise-grade Blockchain

Systems integrators

IBM

Watson IoT (enterprise asset management, facilities management, systems engineering, IoT platform); SI, consulting services

Watson ML; Watson Studio; Watson Assistant; Watson AI; SI, consulting services

IBM Blockchain Platform; SI, consulting services

InfosysDeployable solutions for industrial, consumer IoT

AI, automation consulting services;

Nia AI platform

Services addressing Blockchain, adjacent technologies (shared ledger, distributed ledger, smart contracts)

Specialist technology / start-ups

PTC ThingWorx IIoT platformNA (but uses AI within internal generative design software)

NA

H20.AI NAOpen source, enterprise AI and data science platforms

NA

Public cloud service provider

GoogleGoogle Cloud IoT, Cloud IoT Core managed services

Google AI, DeepMind Google Cloud Blockchain

Microsoft Azure IoTAzure AI, Microsoft AI Platform, Microsoft Cognitive Services, Cortana Digital Assistant

Azure Blockchain Service

Vertical-market hardware, software and non-technology vendors

GE Predix PlatformHuman systems interaction, knowledge management & Big Data, machine learning, computer vision

Industrial Blockchain

Bosch Bosch IoT SuiteAI applied to optimise manufacturing, engineering, supply chain management, intelligent services processes

Blockchain focus via Bosch sensors, software, services strategy

Breadth of IoT platformsLike Cisco, HPE’s Universal IoT Platform is designed to be vendor, industry and client-agnostic, enabling customers to benefit from the vast amount of data generated by connected devices. It takes account of the need for an ecosystem of IoT partners to navigate digital transformation via HPE Connect IoT, which helps customers build IoT projects through documented use cases and the creation of agile consortia. Meanwhile, IBM’s Watson IoT, part of the company’s wider Watson computer system, encompasses a comprehensive range of IoT solutions spanning application enablement, data management, analytics, device management, integration and security. Smaller, specialist players have a significant role too: for example, PTC’s ThingWorx focuses on industrial use cases in particular. There are also a plethora of IoT start-ups, many of which focus on niches such as AI, analytics and data science. Non-technology vendors are also an important part of the value chain. GE’s Predix platform (which was spun off by GE as part of a separate company in December 2018), for example, focusses on the collection and analysis of data from industrial machines.

Predictive analytics as a driver of business outcomesIBM is a leading player in the predictive analytics sector, along with Google, Microsoft and others. IBM’s efforts in this area focus on its Watson product family; IBM Watson ML is designed to enable users to build analytical models and neural networks that can be deployed for use in applications, while the IBM Watson Studio data science and ML platform is designed to predict and optimise business outcomes, and IBM Spectrum Storage for AI aims to supercharge AI data pipelines. In addition, IBM Watson Assistant, which provides access to Watson AI and is delivered through the IBM Cloud, is a ‘white label’ cloud service that allows enterprises to embed an AI virtual assistant within software and brand it as their own.


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Meanwhile, Google AI focusses on conducting research, applying AI to products and new domains and developing tools to ensure wider access to the technology. Google also owns leading AI company DeepMind, which has learnt to diagnose eye diseases as effectively as the world’s top doctors and saved 30% of the energy used to keep data centres cool. Although much of Microsoft’s AI focus is on its Azure cloud platform, other activities are centred around its Cortana Digital Assistant and Microsoft Cognitive Services, which are designed to enable customers to infuse apps, websites and bots with intelligent algorithms to see, hear, speak, understand and interpret user needs through natural communication methods.

Greater intelligence, faster speedsMeanwhile, HPE’s AI-optimised infrastructure and AI software platform is designed to reduce complexity and realise the value of data faster. The company’s AI portfolio also includes its Apollo 6500 Gen10 server-based deep learning platform, and in August 2019 HPE further boosted its offering in this area with the acquisition of business software company MapR, including its tools for analytics, AI and ML. Similarly, Cisco’s AI and ML computing solutions combine a broad set of technologies and applications designed to extract more intelligence from all stages of the data lifecycle.

In 2017, Cisco released Kubeflow, an open-source project designed to make it easier to use ML software stacks like TensorFlow on the Kubernetes open-source container-orchestration system. Another noteworthy, if somewhat smaller, AI supplier is H2O.ai, the creator of an open source ML and AI platform used by hundreds of thousands of data scientists, as well as more than 18,000 enterprises globally. Other solutions include the Infosys Nia platform, which encompasses ML, contract analysis and chatbot capabilities, and the Wipro HOLMES AI platform. And, of course, given the needs of enterprises for detailed information on everything from platform strategy to growth sustainability in order to achieve their desired business outcomes, there is a significant role for the large integrators such as Accenture.

Blockchain as open source collaborationWhen it comes to Blockchain, IBM is a dominant force. In addition to helping create Hyperledger Fabric, an open source collaborative effort designed to advance cross-industry Blockchain technologies, the company has around 1,500 employees dedicated to Blockchain and as many as 500 Blockchain client projects. Its industry initiatives include IBM Blockchain Trusted Identity, IBM Blockchain for Trade Finance, IBM Blockchain World Wire and IBM Food Trust and TradeLens. Yet, while Hyperledger is based in large part on IBM’s Fabric code base, it also works with other Blockchain platforms and technologies. IBM subsidiary Red Hat, known for its eponymous Linux distribution, takes a similar open source approach to Blockchain. Although the company is currently working with Hyperledger and Ethereum, it has also signalled its openness to alternative Blockchain solutions. Indeed, the appeal of building out enterprise technologies based on underlying open-source technol

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The Fourth Industrial Revolution...Fig 2: The evolution of the Fourth Industrial Revolution Steam engine enables new manufacturing processes Mass production in steel, oil and electricity