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Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Industrial sector in Europe ready to make push for IoT

19-Apr-2017
Dr Milos Milojevic (pictured)
Industry Analyst, PAC
Industrial sector in Europe ready to make push for IoT
A new study has found that 72% of industrial companies in Europe plan to increase their spending on IoT in the next 3 years and channel it towards better operational efficiency and new connected products, services and business models.

European manufacturers are turning to the Internet of Things to boost operational efficiency and create new connected products and services, in a push to stay competitive in fragmented European markets, and to resist ongoing economic headwinds and growing operational costs.

Market research and strategic consulting company PAC has undertaken an in-depth study of how large and medium-sized industrial companies in the region are driving IoT initiatives across their business, from which departments and by which challenges are they being driven, and what are the main strategies for moving forward.

The report, “Digital Industrial Transformation with the Internet of Things” is based on briefings with more than 250 senior business and IT executives at large discrete and process manufacturers across Western Europe. With 72% of them being ready to increase their investments in IoT there is a clear appetite for digital industrial transformation.

60% of manufacturers state that they have started their IoT initiatives, which are currently in early, medium or advanced phases of deployment. Some 70% see reducing operating costs as the primary focus of their IoT strategy while more than 50% see their IoT initiatives being driven by the development of products, services and new business models. This highlights how manufacturers are looking for new ways to improve their decades-old legacy systems and processes while at the same time move up their value chain.

From a regional perspective, adoption trends and investment priorities vary from country to country. The Nordics, for example, have advanced the most in terms of adoption, whereas Germany showed somewhat lower levels of adoption than other countries.

Munich-based Head of Digital CX & IoT at PAC, Klaus Holzhauser, commented on the IoT adoption levels of German companies, stating: “German companies could fall short in the IoT adoption survey results as the development of smart and connected products is not as widespread as Industry 4.0 applications of IoT. This is mainly impacted by data privacy concerns and regulations in the German market”.

Data security and privacy is seen by far as the biggest barrier to IoT implementations, which is probably due to a growing number of cyber attacks and burdening regulations in some local European markets. Alarmingly, 54% of the companies admit they still do not use IoT data in their business decision-making.

Dr Milos Milojevic, Industry Analyst at PAC, said: “IoT is a great tool for industrial companies to integrate their operational technology with information technology, and trigger the large-scale digital transformation that can not only bring operational efficiency but also drive their top line growth, as new products, services and business models can be developed. 60% of the companies have already realized this, and are already working on their IoT initiatives.”

Our premium sponsors comment:
“We are seeing client investment and results that reflect the findings of this study,” said Ben Salama, Connected Operations lead at Accenture Mobility, part of Accenture Digital. “Success is most evident in organizations that started with IoT pilots, building business cases based on results achieved using real company data. As IoT investment continues to increase, we expect the next evolution to be around Industry X.0, where highly intelligent interconnected systems create a fully digital value chain, supplemented by new core innovation competences and deep cultural change.”

“The key findings of PAC’s survey and research aligns well with what Hitachi is hearing from its customers across every industrial sector. IoT promises to drive significant transformation and competitive advantages,” said Sara Gardner, Vice President and Chief Technology Officer at Hitachi Insight Group. “The challenge lies in integrating IT and operational technologies, which is essential to ensuring meaningful insight can be extracted from IoT data. Co-creation with a trusted partner that understands IT/OT integration at every dimension will help companies to accelerate IoT solution creation, increase time to value and ensure successful outcomes.”

“For many companies, Industry 4.0 has not yet transcended the mere buzzword status," said Clemens Weis, Partner at Reply. “That is why we have developed a multi-stage approach that helps industrial enterprises to break down this abstract concept and makes them realize where they stand today. From there we can concretize viable steps to leverage the potential of digitalization of manufacturing and draft an Industry 4.0 roadmap tailored to customer’s individual situation and goals ranging from optimizing and redefining processes for increased efficiency to the development of innovative business models for the conquest of new markets.”

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