Nearly two-thirds of manufacturing executives say COVID-19 led to a significant reduction in Industry 4.0 investments
Plano, TX – Jan. 18, 2021 – NTT DATA, a digital business and IT services leader, today announced new Industry 4.0 research with Oxford Economics, which reveals 54% of manufacturing companies are prioritizing revenue growth over the next three years, and 38% are prioritizing improving customer experiences. The research also finds customers are at the heart of why businesses are investing in Industry 4.0, with 57% of respondents focusing on product and service quality, as well as responsiveness to changing demand. While the pandemic slowed some progress on the path to Industry 4.0, this new research analyses how companies are now prioritizing transformation to drive growth over the next three years.
The survey, “The Road to Industry 4.0,” reveals how business and IT executives at manufacturing companies are responding to shifting industry challenges and customer expectations. From supply chain disruptions, to evolving customer demands and skilled labor shortages, manufacturers are investing in new resources across the business to help drive Industry 4.0. Innovation, resiliency and adaptability are at the heart of this transformation, with 37% of respondents saying they are developing new products, services and business models in the next three years, compared to just 25% three years earlier.
“While the pandemic caused unfortunate delays and slowdowns for Industry 4.0 investments, our research shows that manufacturers are ready to accelerate customer-driven digital transformation over the next three years,” said Prasoon Saxena, President, Manufacturing at NTT DATA Services. “The manufacturing industry was especially impacted by challenges over the past two years, which only further stressed the need for business and IT leaders to invest in processes and technologies to drive agility, efficiency and resilience. No one can predict the future or when the next global crisis will hit, but businesses can invest now to ensure they not only survive, but continue to prosper and drive revenue growth.”
Technology At the Forefront of Growth, Innovation
As manufacturing companies focus on improving customer service and driving growth, investments in new digital technologies will enable them to achieve both – and is therefore a primary focus for business and IT executives. In particular, Cloud is seen as a primary driver of Industry 4.0 and is already prevalent across businesses, from daily workforce operations (64%) to customer and sales operations (50%), and after-sales services (48%). Data and analytics technologies are also helping to improve customer experiences and allowing businesses to make more informed, intelligent decisions – with 48% using data and analytics for customer and sales operations, and 45% using it for after-sale services.
Companies are also adopting more emerging technologies – such as Artificial Intelligence (AI), machine learning (ML) and Internet of Things (IoT) – but most are not effectively leveraging these technologies for customer-facing initiatives. While 48% are using AI/ML for production operations and maintenance, only 25% are using it for customer and sales operations and even fewer (18%) are using these technologies for after-sales service. This presents a significant opportunity for companies to expand their use of these innovative technologies to new areas – customer service, supply chains and sourcing, workforce improvements and more – to improve overall experiences and business operations.
Beyond customer-facing initiatives, savvy businesses are also looking to invest in other strategic areas of the business that contribute to revenue growth. The impact of the pandemic on manufacturers caused many of these initiatives to become much more pressing. For example, 45% of respondents say improving supply chain reliability and transparency is a targeted outcome for them over the next three years, and 51% say responsiveness to changing demand is another one – compared to only 33% who said the same three years ago. Evolving societal concerns are also impacting Industry 4.0 initiatives. Three years ago, 42% said sustainability was an outcome they were prioritizing, but that number has increased to 56% for the next three years, demonstrating how the global climate change crisis is impacting business decisions.
Data Drives Transformation
Industry 4.0 is not possible without data and data-driven technologies. However, managing and securing data is a top concern for most in the industry. More than half of respondents cited data governance and security as a top concern, as well as lack of available skills (25%), updating legacy IT infrastructure (38%) and customer resistance to data sharing (26%). Companies need to look toward services, partners and technologies that can help solve these critical challenges, as the benefits of data and analytics are far too great to ignore.
The full report highlights how business and IT executives at manufacturing companies are approaching digital transformation initiatives and shifting priorities as a result of evolving market influences and customer expectations. Read more on those findings here: “The Road to Industry 4.0.”
About the Research
In partnership with NTT DATA, Oxford Economics surveyed more than 500 business and IT executives at manufacturing and manufacturing-related organizations with at least $500m in annual revenue to see how they are preparing for Industry 4.0 transformation—including company strategy adjustments, technology investments, and the barriers they face along the way.
About NTT DATA Services
NTT DATA Services is a recognized leader in IT and business services including cloud, data and applications. A division of NTT DATA headquartered in Texas, the company leverages consulting and deep industry expertise to help clients accelerate and sustain value throughout their digital journeys.