Vision for the future:
Are you ready
for Industry 4.0?
Finding sources of funding and securing new business opportunities
Expense Reduction Analyst – Survey on SMEs
Imprint
Expense Reduction Analysts
Suite 24, 40 Churchill square, Kings Hill, West Malling, Kent, ME19 4YU, U.K.
Telephone: +44 1732 52 58 56 Fax: +44 1732 52 58 50
www.expensereduction.com [email protected]
Contact:
Paolo Massimilla
Authors:
Thomas Löwer Klaus Jeschke
Concept and Design:
Counterpart GmbH Copyright:
Content
02 Content and imprint 03 Foreword
04 Study results
06 Methodology and information about the sample
08 Industry 4.0: Significant impact across the entire company
09 Everyone talks about Industry 4.0. But who deals strategically with Industry 4.0?
10 4th industrial revolution and opportunities
Foreword
Successful companies are always trend-setters. They are the first to spot, un- derstand and implement new technologies. After seeing over the past decade the internet become an integral part of working life, now the entire value chain is being digitalised. The keyword here is Industry 4.0.
The present survey shows however that the vast majority of businesses has not yet understood what is behind Industry 4.0. Many have no idea what it means, and hardly any business has started to effectively drive Industry 4.0 processes forward. It is quite significant that one in three companies cannot allocate areas of responsibilities in-house. Here Industry 4.0 has not even reached strategic level – not to mention operational implementation.
It is evident from investment priorities that companies focusing on the future are always a step ahead. In our survey, decision-makers who concentrate on the implementation of Industry 4.0, confirm that budget resources are alloca- ted above average not only in this area but also in research and development.
These businesses bet heavily on the future and seek opportunities to position themselves more clearly and more successfully within the competitive envi- ronment.
New technologies are always associated with investments. Industry 4.0 in particular represents a structural change for companies that needs to be fun- ded. Sources of funding must be found and exploited. As a result a third of those funds have been gained through cost management. This means that this tool is much more significant than for instance investment resources fi- nanced by credit. For companies that currently lack the financial resources for investments towards Industry 4.0, the message is clear. There is actually some money available – it just needs to be identified and converted. This is where management and people making decisions on finance need to set the right priorities so that the company itself does not miss the boat because of a lack of financial resources, and falls behind the competition.
I hope you will enjoy reading the results of the survey and that you will find some suggestions to, as a trend-setter, effectively implement Industry 4.0 in your company.
With best regards Fred Marfleet The vast majority of
businesses has not yet
understood what is behind
Industry 4.0.
Study results
Understanding digitalisation as key factor and opportunity
The opportunities of digitalisation – the global business world digitalised and inter-con- nected with fully automated manufacture and industry sectors - are in 2015 still being underestimated by SMEs. Only around a third of respondents – regardless of their level of knowledge – perceive to be exposed to increased competition due to digitalisation.
Therefore, companies that now recognise the way to digitalisation move quickly forward and invest in smart, networked production have a great opportunity of taking a pioneering role to ensure the success and sustainability of the company.
Fig. 1 – Statement agreement: competitive pressure
My company will be more vulnerable and have to face more competitive pressure through digitalisation (in %)
Agree completely Agree slightly Neutral
Disagree to a certain extent Disagree completely Don’t know
© Expense Reduction Analysts
Industrie 4.0 – A vision for the future, starting today
40% of the companies surveyed consider Industry 4.0 as one of their investment priori- ties. Therefore, for companies that have a clear idea of Industry 4.0, it is one of the highest investment priorities (65%). Those familiar with Industry 4.0 also expect to have to invest some 67% or even the majority of investments in the digitalisation i.e. in the factory of the future. Other fields of investments mentioned are research and development (54%) and diversification (45%). Companies with a clear idea of Industry 4.0 consider Industry 4.0 and R&D as the main investment priorities, since intensive collaboration is required between IT and R&D.
Cost savings funding the 4
thindustrial revolution
New technologies are always associated with investments. Industry 4.0 in particular repre- sents a structural change for the company that requires funding. This is where a third of the funds come from savings gained through cost management programmes. This means that cost management is here more important than for instance credit-financed investment funds. Besides the reinvestment of profits and cost savings, the other potential tools hardly play any role for the majority of companies surveyed.
Besides R&D companies consider Industry 4.0 as one of their investment priorities.
Industry 4.0 Experts
Industry 4.0 unknowing
Total Industry 4.0 Interested
11
20
24 23
21 1
17
28 23 8
13 11 10
21
23 25
15 6 7
26
22 26
12 7
Fig. 3 – Financial instruments proportional allocation: important role and very important role How do you plan future investments? How important are the following tools? (in %)
Fig. 2 – Investment priorities and needs
In which areas are your investment priorities, if you had additional financial resources? (in %)
Industry 4.0
Reseach & Development/
Innovations
Recruitment/Search for Talents
Increasing Company’s
Capital Ratio
Diversification, i.e. Entering
new markets
New Foundation i.e.
of a subsidiary
No Comments
65
0 5 10 15 20 25 30 35 40 45 50 55 60
26 65
11 40
35 30
25 20
15
10 5
0
35 30
25 20
15
10 5
0 Profits/Depreciation
34 Cost Savings
31
Leasing 14
7 Leasing
4 Venture Capital
5
Public funding Contracting3 1 Issuing of shares
1 Issuing of bonds
Industry 4.0 Experts Industry 4.0 Interested Industry 4.0 unknowing Total © Expense Reduction Analysts 50 54
48 51
28 38 18
30 15 18
12 16
36 45 4142
11 14 1315
8 16
28 15
© Expense Reduction Analysts
Structural characteristic of the sample
The underlying sample of this survey comprises SMEs of various sizes and from diffe- rent industries. As shown in Fig. 04b, the sector of machines and plant engineering, the largest group, represents 40%, followed by companies from the consumer goods industry with 18%, and the financial services sector with 12%. Within the companies surveyed, top management people made 63% of the respondents.
Methodology and information about the sample
Methodological approach
To carry out the study, the chosen methodological approach was that of an online survey, conducted over a period from May 19
thto August 27
th2015. Overall 302 companies took part in the survey. Companies from Germany, Spain, Italy, Finland, Switzerland, Belgium, The Netherlands, Norway and Austria were interviewed.
Fig. 04a, Participants per Country (in %)
Germany
Spain Italy Finland Switzerland Belgium Netherlands Norway Austria Other
0 5 10 15 20 25 30 35 40 45
30 16
14 9 4 3 3 3 3
15
Fig. 04b, Participants per Industry (in %)
Mechanical engineering / plant engineering Chemical industry
Logistics
Banks / Insurance / Financial services Health sector / Pharmaceutical industry Retail / Consumer Goods
Public sector / Not-for-Profit (NPO) Other
0 5 10 15 20 25 30 35 40 45
40 7
6
12 5
18 5
7
Fig. 04d, Participants per Company Size (in %)
0 5 10 15 20 25 30 35 40 45
Up to 99 Employees 100 – 249 Employees 250 – 499 Employees
500 – 999 Employees
Above 1,000 Employees
39 21
17 11
12
Fig. 04c, Participants per role (in %)
Member of the Board / Director / CEO
CFO
Head Procurement / Head Logistics Head of Division / Department Employee
Assistant to Management Other role
0 5 10 15 20 25 30 35 40 45
45
13 6
4
11 3
18
Industry 4.0: A significant impact across the entire company
Digitalisation will not only change production
The vast majority of respondents believe that digitalisation will not only change production, but all the divisions of the company will be changed permanently. Industry 4.0 will bring structural changes within the company, with rapid developments in the area of digitalisation. Therefore many features are embedded in digital components, and can be controlled by i.e. iPhone or software. The more respondents are engaged in the implementation of Industry 4.0, the greater is the agreement with the statement that all company divisions will be permanently changed (over 90%). This development is expected in particular in the consumer goods sector, where over 62%
of respondents agree with this statement.
Fig. 05, Statement agreement: All areas of the company will be affected by the change The digitalisation will not only change the products but all areas of companies. (in %)
Agree completely Agree slightly Neutral
Disagree to a certain extent Disagree completly Don’t know
© Expense Reduction Analysts 61
29 5 1
39
45 9 4
28
38 15
6
46 4
36 9 3 1
2 1 2 3
2 11
Fig. 07, Knowledge of Industry 4.0
How familiar are you with the concept of Industry 4.0? (in %)
Very clear idea Clear idea No clear idea No idea at all First time I hear about it No Comment 30 39
8
28
42 16 4
26
31 13
35 33
9 15 5
7 1
10
2
23
1 11 11
Fig. 06, Statement agreement: All areas of the company will be affected by the change (per Industry) The digitalisation will not only change the products but all areas of companies. (in %)
41
36 4
Manufactoring Industry
62 30
4
Consumer Goods/
Retail
45
39 7
Other
46 4
36 9
Total
2 2 2
4 13
4 4
1 2
3 Agree completely
Agree slightly Neutral
Disagree to a certain extent Disagree completly Don’t know
© Expense Reduction Analysts Industry 4.0
Experts
Industry 4.0 unknowing
Total Industry 4.0 Interested
Everyone talks about Industry 4.0.
but who deals strategically with Industry 4.0?
Industry 4.0 must be a top priority!
Since Industry 4.0 has yet no strategic significance in a third of companies surveyed, it is not clear where the responsibility within the organisation should lie in the first place. In- terdisciplinary project groups – i.e. the groups that have the operational responsibility for Industry 4.0 – are only in place in 14% of companies. Interestingly, Germany is doing far below average compared with other European countries. In Finland, the responsibility lies within interdisciplinary Industry 4.0 teams. Only very few companies (3%) have given the total strategic professional responsibility to their respective production managers.
However, a total of 54% of companies surveyed reported that, in their opinion, the strate- gic planning of digitalisation should be the responsibility of the management or the board of directors. Even if they have some trouble clearly understanding Industry 4.0 (see Fig. 06), successful entrepreneurs find themselves significantly bound to drive ahead and push with the digitalisation processes. The digitalisation of the whole value chain must be in the fore- ground for the management. Therefore not only a better monitoring of the overall process can be ensured, but also Industry 4.0 offers an opportunity to develop brand new business models and to define the corporate strategy.
Successful ent- repreneurs find themselves sig- nificantly bound to drive ahead and push with the digitalisation processes.
100
Fig. 08 – Organisational assignment of responsibilities (Breakdown per country) In your company, who is taking care of the Industry 4.0 topic? (in %)
Germany Finland
Italy
Spain
Other
Total
0 10 20 30 40 50 60 70 80 90
Member of Board/CEO Chief Finance Officer (CFO) Chief Information Officer (CIO) Chief Procurement Officer (CPO) Production Manager
Interdisciplinary Group No comment
© Expense Reduction Analysts
44 7 9 1 7 6 27
21 4 21 36 18
24 5 14 7 50
17 27 2 25 21
35 5 13 29
32 6 15 29
8
1
1 4
3 12
14
Well over half of the participants have no clear idea of what is behind the notion of Indus-
try 4.0. Even companies for which digitalisation is of great significance have, with almost
50 % of all businesses surveyed, no clear idea of what Industry 4.0 is.
4
thIndustrial revolution and opportunities
Far-reaching impact for companies and markets
The survey shows that German companies in particular plan to achieve with Industry 4.0 projects higher productivity (60%), innovative business models (47%) and a better control of the value chain (59%). People with intensive knowledge about Industry 4.0 appreciate the opportunities of digitalisation – especially for new corporate concepts and business models – by up to 7 times more than people who confess having no insight into Industry 4.0.
Higher Productivity
Better control of value-added chain
Innovative business models
Higher customer loyalty
Better coordination of production stages
Greater added-value
Diversification Opportunities
Cost Reduction
Expansion of the product portfolio
19 7
19 38 4 13
16 6 1
26 48 3
12 5 48
6 25 4
19 36 20 8 3 14
19 7 3
27 42 2
11 4 46
11 25 3
22 8 14
22 32 2
20 5 3
35 35 2
14 11 47
6 22
20 12 14
13 35 5
20 7 3
23 43 4
6 15 49
8 17 5
22 10 14
18 30 6
21 10 2
27 33 7
17 6 46
6 20 5
5
20 16 13
14 32
21 13 2
19 40 5
9 11 48
9 18 5
23 15
13 32 3
21 10 2
24 39 4
12 12 49
5 22
26 17 5 14
11 27
26 16 2
13 36 7
21 17 46
5 8 3
25 17 14
10 26 8
28 14 3
14 35 6
All Industry 4.0 Experts Industry 4.0 Unknowing
All Industry 4.0 Experts Industry 4.0 Unknowing
All Industry 4.0 Experts Industry 4.0 Unknowing
All Industry 4.0 Experts Industry 4.0 Unknowing
All Industry 4.0 Experts Industry 4.0 Unknowing
All Industry 4.0 Experts Industry 4.0 Unknowing
All Industry 4.0 Experts Industry 4.0 Unknowing
All Industry 4.0 Experts Industry 4.0 Unknowing
All Industry 4.0 Experts
Fig. 09 – Opportunities through Industry 4.0
Which opportunities in Industry 4.0 do you see for your company? (in %)
14
The feeding changes in the production environment, brought by Industry 4.0, will bring far-reaching consequences to businesses and markets. Therefore, companies which quickly push forward the way towards digitalisation and invest in the smart factory have great chances to take a pioneering role in their industry and actively build their future success.
Cost savings in particular play a significant – if not very significant – role in the funding of Industry 4.0 projects. Cost reduction programmes (47%) are, in addition to the rein- vestment of profits (48%), the main financial tool to fund the investments required and to provide the crucial resources for changes and advancements to implement Industry 4.0 projects. Companies are thus planning to fund necessary investments from cost reductions by up to 31%.
Furthermore, the survey shows that respondents faced with issues they do not under- stand, feel uncomfortable and identify risks with Industry 4.0. In addition to the technical challenges such as the dependency of function reliability (53%), the interface definition (52%) or the data security (49%), the availability of expertise and staff (47%) are rated as the biggest obstacles.
Cost savings in par- ticular play a signi- ficant – if not very significant – role in the funding of Indus- try 4.0 projects
Very big Big Medium Small Very small Don’t know © Expense Reduction Analysts
Fig. 10 – Risks through Industry 4.0
What risks do you see in Industry 4.0 for your company? (in %)
Dependency on well-operating functionality Compatibility of Interfaces
Data protection
Know-how/Staff
Increasing competition
High investment capital
Public Infrastructure
Loss of competitiveness due to lack of investment funds
14 39 24 11 12
39 24 10 1
13
17 32 27 10 3
33 31 8 1 12
15
12 13 16
15
8 29 31 17 3
8
7
19 28 25 9
20 33 19 7
28 36 15 1
0 10 20 30 40 50 60 70 80 90 100
13 12
4
