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June 23, 2020updated 25 Jun 2020 12:16pm

Industry 4.0: From the ashes of the pandemic

Thanks to coronavirus, industry 4.0’s birth is more painful, brutal and quick than we could have ever expected. Here’s why adoption is vital to companies’ survival. By Lucy Ingham

By Lucy Ingham

It’s often said that necessity is the mother of invention, but it’s also the mother of adoption. And that’s certainly been the case when it comes to the technologies under the broad umbrella that is industry 4.0 during the coronavirus crisis.

Digital transformation – the act of adopting industry 4.0 technologies such as big data analytics, the internet of things (IoT), autonomous systems and machine learning – has been spoken about at great length over the past few years. But while many companies have begun to adopt these technologies and incorporate them into operational processes, many more have not got beyond buzzwords and trial projects.

A 2019 survey by Censuswide found that while 95% of leaders at public and private sector organisations considered themselves to be ‘digital thinkers’, only around half actually reported having overseen successful digital transformation projects.

There’s almost certainly more than a few CEOs now regretting not moving faster on bringing industry 4.0 into the operational fold, because now the coronavirus has hit it has become more essential than ever.

“The current crisis will be one of the greatest drivers of digital transformation, as businesses seek visibility of data across systems and volatile supply chains,” says global head of AI and advanced analytics at industrial software giant AVEVA James H Chappell.

“There has been an educational shift; customers understand now where they need to get to and how quickly they need to do it. This is a moment where businesses must go faster. Customers are rapidly going digital – it is no longer a ‘nice to have’.”

Industry 4.0 and the coronavirus: Haves and have-nots

The sudden need to pivot to home working has carved the business community into the digital haves and have-nots; those that had already switched to cloud-based systems and an agile approach have been able to transition relatively comfortably, but those that have done little to transform their systems are struggling.

“Those who have been slow to engage with industry 4.0 are now facing an unprecedented struggle to run their businesses with limited on-the-ground workforces,” says Chappell.

“Without IoT, analytics and cloud, businesses are running blind into this crisis.”

Many companies have been forced to cut the brakes on formerly sluggish digital transformation projects, discovering that their long-hyped initiatives really didn’t need that extra year of meetings and pilots before they could be put into place.

And this goes far beyond just enabling employees to remotely access company files. The ability to analyse employee and company performance; track products on the supply chain; monitor organisational systems; and a myriad of other tasks are enabled or significantly enhanced by industry 4.0 technologies.

“The current crisis is accelerating the inevitable,” says Chappell. “Businesses are redoubling investment into industry 4.0, using data in increasingly sophisticated ways to provide visibility and certainty into their operations.

“Data acts as a source of truth that focuses teams on the critical factors that determine business resilience during this period of great disruption. AI is driving industry 4.0 and providing the brains behind it to affect business transformation in ways never before possible.”

Survival in a baptism of fire

Despite the immense potential that industry 4.0 holds, the reality is that for some companies speeding up its adoption in the current climate will be painful, stressful and intensely challenging. After all, if digital transformation was easy and required minimal resources, few organisations would have dragged their heels on the matter.

“For those who have started the process of digital transformation, progress will be rapid in the adoption of industry 4.0, but there is a yawning gap for those yet to start the journey,” says Chappell.

This is particularly problematic given that this transformation needs to occur through two distinct phases that present their own unique challenges. While we are currently seeing organisations transition to lockdown, which has prompted layoffs, furloughs and rapid pivots in some industries amid a widespread move from on-premise to on-cloud, the looming global recession will see many organisations take a far greater battering.

In April, chief economist at the International Monetary Fund Gita Gopinath described the situation as a “crisis like no other”, warning of a 3% contraction of the global economy and the worst decline since the Great Depression 90 years ago.

And in the midst of this climate, organisations that now stand at the start of the digital transformation road have a long and winding route ahead of them – one that it will likely take considerable expenditure to traverse.

“Shifting operational models can be costly,” says CEO and founder of financial consultancy deVere Group Nigel Green. “It is likely that well-resourced firms will take advantage of the gap that will likely be created between those firms who can afford to adapt quickly and those which cannot.”

“The biggest barrier right now will be heavy capital expenditure at a time where balance sheets are under strain,” agrees Chappell, adding that such expenditure is likely to prove worthwhile.

“Investing now, however, will prove out in the medium term as businesses manage their facilities through the coming recession. The efficiency gains from industry 4.0 will be a saving grace in the face of margin pressure.”

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