TEASER

INDUSTRY 4.0 BAROMETER 2019

Technology

Strategy & Goals

IT Integration

Preamble

Dear Sir or Madam,

in times of globalized and volatile markets as well as economic and geopolitical tensions, companies must adapt more than ever to changing condi-tions and new customer needs. In their efforts to achieve the necessary flexibility and agility of the value-creating and supporting processes in indus-trial ecosystems in order to remain internationally competitive in the long term, companies are con-tinuously confronted with new challenges.

Industry 4.0 provides new strategic and techno-logical opportunities for many of these challenges. The flexibility and efficiency in the interaction of internal and external company processes in the areas of procurement, production, logistics and sales can be enormously increased by Industry 4.0. However, many companies can only roughly esti-mate their own Industry 4.0 maturity level in com-parison with partners and competitors. In order to quantify this comparison and also to make it more transparent, MHP, in cooperation with Ludwig-Maximilians-Universität, designed the Industry 4.0 Barometer and conducted it for the first time last year.

The aim of the survey is the long-term establish-ment of a cross-industry benchmark to determine the degree of maturity of existing and future digitisation activities within of German industry. Through the periodic execution, both a competitive comparison as well as the temporal development of Industry 4.0. In the past year, the participants were trained in the focus topics of technology, IT integration and Strategy & Goals. In summary, the Industry 4.0 Barometer 2018 showed that the rel-evance of Industry 4.0 has been understood in the competitive context, but that the company-wide implementation of Industry 4.0 often fails due to a lack of strategy, silo thinking and inflexible IT landscapes.

Based on the findings and recommendations for action of last year‘s study, the Industry 4.0 Barom-eter 2019 enters the second round. This year‘s focus is on the drivers and obstacles for the cross-divisional and cross-company rollout of industry 4.0 solutions. To this end, approximately 200 participants from various industries, in particular managers and senior staff from IT and specialist departments, were surveyed on their assessment.

We would like to take this opportunity to thank the LMU Munich for their excellent cooperation. Special thanks go to Prof. Dr. Johann Kranz and Esther Nagel, who developed, conducted, ana-lysed and evaluated the study together with MHP.

Tom Huber and Andreas Henkel wish you much pleasure and valuable insights.

This teaser is an extract from our study Industry 4.0 Barometer. For more insights please contact us directly or download the complete study at:https://www.mhp.com/en/company/studies/

Contacts

Project ManagerAndreas Henkel

MHPSenior Manager

Andreas.Henkel@mhp.com+49 151 4066 7526

SponsorTom Huber

MHP Associated Partner

Tom.Huber@mhp.com+49 151 40667630

SponsorProf. Dr. Johann Kranz

LMUHead of the Chair of Inter-net Business and Internet

Services kranz@lmu.de

+49 89 2180 1875

Thank you. On behalf of MHP Management- und IT-Beratung: To all respondents for supporting the study with their views and assessments.

To the Ludwig Maximilian University, Munich for the successful and continuously productive collaboration. Our special thanks go to Prof. Dr. Johann Kranz and Ms. Esther Nagel, Chair for Internet Business and Internet Services.

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Reproduction, microfilming, storage and processing on elec-tronic media are only permitted with the consent of the pub-lishers. The content of this publication is intended to provide information to our customers and business partners. It reflects the authors’ state of knowledge at the time of publication. To resolve the relevant issues, please use the sources speci-fied in the publication or contact the persons detailed above. Any views expressed here merely reflect those of the relevant authors. Charts may contain rounding differences.

Key Findings

2019Summary

Industry 4.0 Barometer

OUTPUT

0 10 20 30 40 50 60 70 80 90 100

2018 Barometer value 2019 Barometer value Disagree Neutral Agree

Cost reduction and increase in process quality and efficiency

Development of new market and customer segments

Provision of new services for one’s own products

Development of new business models

2 %

9 %

8 %

9 %

23%

51%

31%

43%

75 %

40 %

61 %

48 %

Across all industries, Industry 4.0 focuses more on cost reduction and efficiency increase rather than new business models.

Strategic Focus of Industry 4.0

2018 Barometer value 2019 Barometer value

Supply chain transparency

Digital Twin

Automation & autonomous systems

Digital production technologies

Big data & data analytics

Use is planned

Practical testing

Partial use

Full use

The use of industry 4.0 technologies is increasing and is outgrowing the experimental phase.

Aggregated presentation of technology dissemination in German industry

2019 Barometer value Disagree Neutral Agree

... because established, historically grown IT systemsimpede the integration.

... because function-related and historically grown data silos complicate the implementation of cross-departmental solutions.

... because there is no continuous data exchange within the value chain.

… because due to the daily business not enough capacities are available.

... because it is difficult to define the profitability of the investments.

... because of difficulties for Industry 4.0 to hire qualified staff („War of Talents“).

9 % 43% 48%

44%

48%

53%

42%

38 %

50%

46%

40%

50 %

54%

6 %

6%

7%

7%

9%

0 10 20 30 40 50 60 70 80 90 100

Obstacles for the introduction of Industry 4.0 technologies

The introduction of Industry 4.0 technologies in our company is being delayed, …

Rigid legacy systems as well as historically grown data repositories with the resulting data disruptions complicate the implementation of the Industry 4.0 solutions.

The development of new business models and services by Industry 4.0 is considered less of a priority than last year.

The awareness for Industry 4.0 has increased across all sectors.

The use of Industry 4.0 technologies is increasingly shifting from the experimental phase to the test and pilot phase.

There is an even stronger focus on cost reduction and efficiency improvement through Industry 4.0.

The Digital Twin of plants and systems is

still only in the experimental phase.

Key FindingsOverview

The use of additive manufacturing technologies such as 3D printing has increased by 20% compared to the previous year.

Products and components are increasingly being equipped with sensors to improve transparency in the Supply Chain.

The IT system landscape does not show Industry 4.0 maturity yet.

IT security is a high priority in important decisions regarding Industry 4.0.

Almost every second respondent

sees the lack of cooperation

between the areas involved as

an obstacle to the introduction of

Industry 4.0 technologies.

The Industry 4.0 focus on cost reduction and efficiency improvement has increased by 27%.

The complete use of Condition Monitoring has increased three times compared to the previous year.

Almost every second company sees the lack of qualified employees as an obstacle to the implementation of Industry 4.0.

Technology pioneers see cyber security and unsuccessful pilot projects in particular as primary obstacles to the implementation of I4.0 - technology latecomers, on the other hand, see the problems for the industry 4.0 rollout in organizational issues, such as the burden of day-to-day business and lack of responsibilities.

For technology pioneers, the CIO is three times more likely to be part of the management than for technology latecomers.

More than 50% of the companies lack the capacity to implement Industry 4.0 due to the daily business.

High investment costs as well as an indefinable profitability are for 40% of the respondents an obstacle for the implementation of Industry 4.0 solutions.

According to 50% of the respondents, legacy systems and data silos prevent the rollout of Industry 4.0 – especially in large companies.

Con

clus

ion

&Re

com

men

ded

Act

ions

Technology Strategy & Goals Drivers & Obstacles IT Integration

Conclusion The technological maturity of Industry 4.0 and the awareness of Industry 4.0 have widely increased. The use of technology shows a clear trend from the experimental stage towards practical application across all sectors.

Conclusion There is a huge backlog in IT requirements for Industry 4.0. Rigid and inflexible, low performance legacy systems are the biggest challenge for implementing Industry 4.0. solutions.

Conclusion The focus on reducing costs and increasing efficiency was strengthened, while the development of new business models and services plays a subordinate role. This shows that evolution-ary rather than revolutionary changes are being sought. One reason for this may be the current uncertain geopolitical and eco-nomic situation.

Conclusion The challenges of IT integration, such as historically grown IT system landscapes and data silos, are also the most serious obstacle to the implementation of Industry 4.0 solu-tions. These conditions promise high investment costs, while at the same time the ROI of these investments is often not clearly foreseeable. In addition, organizational conditions such as lack of capacity due to day-to-day business or lack of qualified employees impede successful implementation of Industry 4.0 projects.

Recommended Actions Improve supply chain transparency and traceability of products and

components through even greater use of sensors

Digitally upgrade equipment and systems to enable 5G connectiv-ity and create the basis for high performance networking

Intensify data analysis along the value chain to validate the ben-efits of Industry 4.0 solutions and justify their rollout

Develop innovative Industry 4.0 solutions through coopera-tion with specialized technology partners to integrate their core competencies

Recommended Actions Increase modularity of IT systems to improve the performance of the infrastructure and thus create the basis for the rollout of Industry 4.0

Keep increasing the scalability of IT architectures by using cloud solutions and APIs

Dissolve system boundaries and data silos to facilitate and accelerate the integration of new applications and partners

ntensify exchange and cooperation with partners along the value chain to develop common standards and data formats

Recommended Actions Intensify cross-departmental cooperation and knowledge exchange between business and IT

Promote cross-company and cross-sector know-how transfer with technology leaders in order to exploit synergy potentials

Test innovative Industry 4.0 solutions together with technology part-ners in test environments in order to avoid risks for the operational business

Management must play a key role as a driver and motivator in a dynamic environment and move forward on the path to Industry 4.0

Recommended Actions Creating an organisational framework through management and establishing a defined project organisation for innovative Industry 4.0 projects

Intensification of approaches to data centricity to dissolve silo thinking and focus on the oppor-tunities offered by openness and transparency of data

Implementation of innovative data management solutions (e.g. Enterprise Knowledge Graph) to enable Industry 4.0 solutions despite historically grown IT system landscapes and data silos

Rapid implementation of pilot projects to quantify and validate the potential benefits of data and predict the return on investment in Industry 4.0

Study RespondentsCompany Size

Small companies(<1,000 employees)

Medium-sized companies(1,000 to 9,999 employees)

Automotive OEM

AutomotiveSuppliers

Medicine andHealth

Machinery and Equipment

Energy andWater Industry

Paper andPrinting

Other

Industry Sectors

Large companies(>10,000 employees)

N = 195N = 195

31 %

25 %

44 % 19 % 22 %

24 %

17 %

7 %

7 %

4 %

Hierarchy levels between the respondents and management / executive board

No levels

1 level

2 levels

3 levels or more

IT

Production andLogistics

Research andDevelopment

Marketing andDistribution

Management

Purchasing Department

Other

26 %

22 %12 %

11 %

6 %

4 %

19 %

N = 195

Functional Areas

N = 195

33 %

50 %

7 %

10 %

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