Our website uses cookies to give you the most optimal experience online by: measuring our audience, understanding how our webpages are viewed and improving consequently the way our website works, providing you with relevant and personalized marketing content.
You have full control over what you want to activate. You can accept the cookies by clicking on the “Accept all cookies” button or customize your choices by selecting the cookies you want to activate. You can also decline all non-necessary cookies by clicking on the “Decline all cookies” button. Please find more information on our use of cookies and how to withdraw at any time your consent on our privacy policy.

Managing your cookies

Our website uses cookies. You have full control over what you want to activate. You can accept the cookies by clicking on the “Accept all cookies” button or customize your choices by selecting the cookies you want to activate. You can also decline all non-necessary cookies by clicking on the “Decline all cookies” button.

Necessary cookies

These are essential for the user navigation and allow to give access to certain functionalities such as secured zones accesses. Without these cookies, it won’t be possible to provide the service.
Matomo on premise

Marketing cookies

These cookies are used to deliver advertisements more relevant for you, limit the number of times you see an advertisement; help measure the effectiveness of the advertising campaign; and understand people’s behavior after they view an advertisement.
Adobe Privacy policy | Marketo Privacy Policy | MRP Privacy Policy | AccountInsight Privacy Policy | Triblio Privacy Policy

Social media cookies

These cookies are used to measure the effectiveness of social media campaigns.
LinkedIn Policy

Our website uses cookies to give you the most optimal experience online by: measuring our audience, understanding how our webpages are viewed and improving consequently the way our website works, providing you with relevant and personalized marketing content. You can also decline all non-necessary cookies by clicking on the “Decline all cookies” button. Please find more information on our use of cookies and how to withdraw at any time your consent on our privacy policy.

Skip to main content

A decade of Industry 4.0 investments: Time for review and evaluation

The origins of Industry 4.0 (I4.0) date back to 2011, when the German government initiated a project to promote computerization of manufacturing. Since then, industrial companies have been investing in I4.0 technologies, such as artificial intelligence, machine learning and IoT.
Lately, there has been a lot of rethinking within the economy as a result of the pandemic, trade wars and the Russia-Ukraine war that has impacted the availability of supplies. Consequently, we will see an accelerated growth in digitalization, and Industry 4.0 related solutions and technologies.

Don't just improve, innovate!

According to Roland Berger’s 2021 study, How to build a successful digital factory, most I4.0 projects focus on improving operational excellence (like process improvement and cost reduction), leaving other possibilities (such as creating innovative products or new business models) virtually untapped. Although the willingness of the enterprises to further invest in I4.0 and digitalization projects remains high, the focus is not shifting towards product and business innovation. Whether this will be the right path to follow remains to be seen.

Most I4.0 projects focus on improving operational excellence, leaving other possibilities virtually untapped.
Don’t just improve, innovate!

Becoming operationally more effective and efficient is necessary to remain competitive from a cost perspective. Nevertheless, there are limits to optimizing operations with diminishing cost savings over time. Neglecting product and service innovation is not the right strategy to survive in the long run. Therefore, differentiation against competition by fostering digital innovation will become increasingly important, with I4.0 technology supporting and enabling the process.

How should you evaluate your Industry 4.0 investments?

At the beginning of the fourth industrial revolution, clients felt partly overwhelmed by the opportunities stemming from new technologies and business models, so helping them choose the right concepts and technologies to implement was essential.

The Roland Berger study cited earlier found that after 10 years, almost 70% of companies are still in the initiation phase, which comprises idea generation, planning and budgeting. The rest have started I4.0 projects with limited scope and to a lesser degree, “full-blown” implementations.

The question is whether or not these full implementations have really delivered the expected benefits. If not, why have these investments shown no or little return on investment (ROI)?

Since new technology is involved with little or no experience stemming from previous projects, the pitfalls for the investment are many and the reasons for a malperformance of the investment remain unclear. When you observe that investment targets are at stake or that the solution implementation is experiencing delays or acceptance problems, you should consider evaluating your investment. The goal of such review should be to:

  1. Identify the reasons why investments are underperforming
  2. Evaluate the benefits of I4.0 investments in terms of process improvements, revenue increases and/or cost reductions

The assessment should cover all company domains touched by the investment, including the business landscape, the company’s processes, structure and its application landscapes. It must lead to tangible results that can help enable the following activities:

  1. A plan to turn around a running project and save the investment. It can include reassigning tasks, improving stakeholder communication and/or buy-in, or redefining the solution scope
  2. A recommendation to stop the project or disinvest, since any further investment will increase financial losses and not help achieve the expected business targets
  3. Lessons learned and knowledge assets that can be applied for future I4.0 investments to avoid future issues

Given the disruptive nature of I4.0 investments, it is crucial to sense problems in investments, identify their root causes and define sustainable actions. Otherwise, the complete investment may be at stake.

By Stephan Zimmermann, Global Head of Incubator Portfolio Industry Manufacturing

Posted on: September 20, 2022

 

Share this blog article


About Stefan Zimmermann
Global Head of Incubator Portfolio Industry Manufacturing
Stefan Zimmermann is responsible for the innovation and portfolio development in Industry 4.0 at Global Atos B&PS. He aims at helping industrial companies to identify business opportunities enabled by Industry 4.0 during their digital transformation process, embracing the Industry 4.0 framework. He’s got a very strong industrial background, having worked for companies like Siemens (>10 years) and Rheinmetall Group and also comprehensive consulting skills gained when working for Roland Berger & Partner.

Follow or contact Stefan