PwC’s 2016 “Industry 4.0: Building the digital enterprise” global survey of companies in a broad range of industries looks at what is required to enable digital transformation in a business and the planned investment in different sectors. Key findings from the report are of interest to Natural Resources companies such as mining, forestry, water and oil and gas.
First, across the board, all companies in every industry plan to invest 4 to 5 percent of their revenues by 2020 in digitization. The second key finding is that the time to start is now. Companies who are waiting for the “perfect technology” will find that they will not catch up to the leaders, who will continue to innovate ahead of them.
A quick refresher on what Industry 4.0 is, is summed up nicely by PwC : “Industry 4.0 (is) a shorthand to describe a journey industrial companies are taking towards a complete value chain transformation … Industry 4.0 focuses on the end-to-end digitization of all physical assets and integration into digital ecosystems with value chain partners.”
According to the companies PwC surveyed who have digitized, improvements are being seen in both the top and bottom line over the next 5 years, with annual revenues increasing on average by 2.9% and cost reduction by 3.6%. Early adopters with the highest investments in digitization report that they will see even larger gains.
PwC’s survey shows that early adopters will see “game-changing improvements in cost structures, operational efficiency, and revenues.” In light of this, one-fifth of these first movers plan to invest 10% or more of their revenues in digital transformation in the next 5 years.
For companies who are waiting for that “perfect technology”, PwC’s strongest message can be summed up as do not wait. The investment required to catch up will be too great, and fast movers will continue to have a wide advantage. Further, Industry 4.0 will become a “qualifier to compete … (and) for funding. Companies who have not kept up will not only find themselves struggling to maintain market share but are also likely to face higher capital funding costs.”
Apart from imploring companies not to wait, the other key message for them from is that the greatest barrier to transformation is not technology, it is the culture change that is needed, and that must start at the top, with a commitment and vision from the C-suite.
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