Disillusionment with Industry 4.0

Last year, 44% of companies in Germany made no or only limited progress on the topic of Industry 4.0. Only just over one in ten companies state that they have already fully implemented Industry 4.0 applications and strategies.

The pioneers of digital transformation invest an average of 18 percent of their annual research budget in topics relevant to Industry 4.0 - the figure for the laggards is less than 8 percent. These are the key findings of a recent study by McKinsey & Company entitled "Industry 4.0 after the initial hype".

For the study, 300 decision-makers from industry in Germany, the USA and Japan were surveyed.

"We are experiencing a certain disillusionment with Industry 4.0"

explains McKinsey partner Dominik Wee, one of the authors of the study.

"Almost all companies have recognized the urgency. But only a few are already deriving productive benefits from Industry 4.0 applications such as big data analysis and 3D printing, or have even adapted their business model to the changes brought about by digitalization".

Nevertheless, German industry remains optimistic: 92% of companies state that they see Industry 4.0 as an opportunity and not a threat. Every second company in Germany also expects to increase its competitiveness through Industry 4.0.

On average, they expect cost improvements and sales growth of ten percent each. Only one in five German companies surveyed stated that they had already defined an Industry 4.0 strategy or drawn up a roadmap.

Only a third of companies have clearly defined responsibilities for Industry 4.0. Dominik Wee:

"At the moment, there are often very trivial obstacles that stand in the way of implementing Industry 4.0."

Silo thinking between the production, development, IT and finance departments is still widespread in many companies. This makes it difficult to coordinate Industry 4.0 projects across the entire organization.

Many companies also lack the courage to tackle the necessary radical changes. This also includes justifying the necessary major investments in IT architecture when the potential revenue from Industry 4.0 cannot yet be quantified.

Many companies have difficulties recruiting employees with new skills profiles. There are also concerns about cyber security: the implementation of Industry 4.0 applications often requires collaboration with partners.

Many companies have concerns about IT security in the partner's network or in transit. They are therefore reluctant to share their data.

"To overcome these barriers, we need a clear commitment at board level to drive forward the topic of Industry 4.0"

says Dominik Wee.

According to the McKinsey study, the picture so far is different: In only 19 percent of German companies is the CEO responsible for the Industry 4.0 strategy.