In 2009, there were 2.5 billion devices with unique IP addresses connected to the internet — most of these were cell phones and computers. By 2020, there will be up to 30 billion connected devices with unique IP addresses, and many of these will be industrial products. Driven by new digital technologies, cloud computing and the Internet of Everything, this new industrial connectivity is driving what’s referred to by some analysts as “Industry 4.0.”
In January 2015, Accenture predicted that Industry 4.0 could add $14.2 trillion to the world economy. Despite the buzz about this reinvention of the industrial marketplace, the latest Automation Alley research shows that only 52 percent of US manufacturers have a budget and process to support new technology. Of the 48 percent that do not, the top barriers are cost, lack of understanding of new technology and employees reluctant to change.
Regardless of where your company is today, Industry 4.0 represents a massive market opportunity. Here are some steps you might consider taking to prepare your company to take advantage of this historic change:
1. Cut Through The Hype
Gartner Research’s “Hype Cycle” lists the stages of a market transition. It starts with the "Technological Trigger” stage, in which a new technology ignites a market transition. Next comes the "Peak of Inflated Expectations;" the “Trough of Disillusionment;” the “Slope of Enlightenment;” and ultimately the “Plateau of Productivity.”
As Industry 4.0 navigates the early stages of the hype cycle, it’s critical that you cut through the hype and focus on the challenges and opportunities for your business. Start by gaining an understanding of how technology is changing your industry. For example, look into how new manufacturing technologies are revolutionizing shop floors and manufacturing workflow. Read up on how new sensor based technologies are enabling “smart” industrial products, or how digital technology is opening up new supply chain opportunities.
2. Develop A Game Plan
If you haven’t already, develop a budget for new technology adoption. You may want to start small and accelerate adoption as your business grows. As a frame of reference, perhaps consider creating a budget that is 4 percent of your current revenues.
Think about putting together a technology evaluation team inside your company, and give this group the mandate to spend a small percentage of their time evaluating new technologies and systems, and educating the rest of the company.
3. Talk With Your Customers
While it’s easy to get caught up in servicing your current customer deals, don’t overlook asking your customers about their future product plans and where they see opportunities or competition. In discussing their “product roadmaps,” you’ll likely learn that they’re looking at new products and/or new ways to innovate with their existing products.
One of the foundational aspects of Industry 4.0 is the ability to connect virtually anything to the Internet. Did you know that GE Aircraft already takes in more real-time data from airplanes than the pilots at the controls? This power has extraordinary implications for a wide range of industries. We’re already seeing cars that identify when they need service. Homes that can spot and deal with electrical or plumbing problems. Industrial products that can spot a component failure before it brings down the system. Equipment that can repair itself.
If your customers are planning new, internet connectable products, now is the time to know. There may be specific areas of technology in which you need to invest, so you can continue to grow your supplier-customer relationship.
4. Talk With Your Peers
Competitive disclosure issues aside, it’s vital to discuss with your peers the challenges and opportunities presented by Industry 4.0. Regional associations, trade shows, conferences and industry communities are great forums in which to connect, share ideas, gain a sense of perspective and measure where you stand in comparison to others in your industry.
I have a small group of industry peers that I regularly communicate with to share new ideas, gain insights and gather feedback. I try and schedule a phone call, lunch or dinner at least once a week with someone in this peer group and have found this process to be easy, valuable and enjoyable.
5. Analyze Your Talent Gaps
New technology brings with it the need for new skills. In many businesses, this creates a cultural change having a significant impact on employees. Many resist the new technology out of fear or lack of understanding. It’s vital to get past this apprehension with your existing employees.
Look into easy ways you can start educating your workforce. In addition to formal training, bring in guest speakers and regularly share market trend information with your teams. Hold all-hands meetings where you can openly address the need to change along with the market, and frame the changes within the context of opportunities for success and growth for the business, and for employees.
Regardless of your success with your existing workforce, thriving in Industry 4.0 may ultimately require bringing some new talent on board. If you don’t have someone with a working understanding of the core technologies fueling this next generation of the industrial economy, it may be time to hire someone who does
6. Be On The Lookout For New Competitors
Think about it. No major auto company executives gave Elon Musk a second thought until he launched Tesla. Extraordinary advances in battery technology allowed Musk to step into an industry he knew little about and quickly develop a strong brand and company. Tesla today is valued at $48.7 billion, recently surpassing Ford as the second most valuable US auto company. It’s on pace to surpass GM — the number one US auto company at $51.1 billion.
Uber, while still a private company, is valued at $70 billion, larger than any auto company. Yet they don’t produce or own cars. The advances in digital, mobile, cloud and application-based technology allowed Uber to literally come out of nowhere to become a large, fast growing company that has redefined the taxi and auto industries.
New technologies today are enabling new entrants to the industrial product marketplace. Take the time to research new companies that are emerging. Make sure you’re aware of potential new competitors who might be leveraging technology to offer a product or service that competes with — or replaces — yours.
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Thomas has helped the industrial marketplace harness ever-evolving technology for more than 120 years. In the coming months you’ll see us expand the actionable information and resources on our THOMASNET.com platform, to help you harness these exciting changes in the market so your business can continue to thrive.