Industry 4.0 is not a classical IT project. Stop treating it like one

Soma Tah

No two organizations’ Industry 4.0 or digital journeys are ever the same because they might have different business priorities and expectations altogether. As business imperatives and financial conditions shift, Digital considerations also need to be revised. For example, with the pandemic putting constraints on the financial and people resources, many business leaders have acknowledged that some of their Digital plans have either been put on hold or been de/re-prioritized, despite knowing well how that can place the organization at a disadvantage.

Venugopal G, General Manager and Head- Digital Advisory and Industry 4.0, Bosch Digital talks more about the challenges faced by the businesses in their digital and industry 4.0 journeys, especially in the post-pandemic scenario, blind-spots in the digital leaderships and how to overcome them with a Frugal Digital approach. 

As we move towards a more connected future, what are some of the challenges that the businesses are likely to face while they embrace industry 4.0?

Digital opportunities and benefits from Industry 4.0 are too compelling to ignore by any business leader. But, there is always this confusion around ‘where to start’, especially if you are in the early stage of Industry 4.0 journey. Instead of being drawn by peer 
pressure or market hearsay, it is best to reflect upon your ‘purpose’ of Industry 4.0. Aspirations could vary from leaps in productivity, efficiency and quality to building an organization of superior sustainability, health and safety capabilities. On the other side, connected services leveraging IoT and AI can create a competitive advantage. What it means is that a plan needs to be put in place.

Most challenges are a function of your Industry 4.0 journey. We often see organizations get entangled in long POCs losing valuable time. It’s critical to take a ‘fail fast-learn fast-scale fast’ approach and not get stuck for long. You don’t need to succeed at every POC!

Industry 4.0 deals with huge amounts of data in terms of volume and variety at a fast pace. Managing and comprehending the data can pose tech challenges. Legacy machines and old tech stack will aggravate it. Interoperability issues – in terms of protocols, systems and even vendors – impede scale, new use cases and innovation. Creating islands of tiny solutions without keeping a view of certain organizational tech standards will create an issue later. A scalable Enterprise Architecture design is a must early in the game.

Data / Cyber Security is another concern given more instances of breaches getting reported lately. However, our experience is that technology is less of a challenge compared with the will and org creativity to counter it. It’s more important to look around and learn from your ecosystem partners, competitors, and own people.

Talent or lack of it still remains a big challenge. You need a strategy to re-train the existing workforce and complement it with the induction of niche talent from the market.

People dimension unfortunately is taken for granted by many leaders. Industry 4.0 initiatives often do not move at a reasonable pace because people involved are not taken on board. As we are dealing with Organizational Change, and it needs to be identified and planned for at the leadership level.

What are some of the leadership blind spots that businesses face in the new Digital Economy?

The fact is that only half of the Digital initiatives have fetched the targeted results. One research indicates that only 5% of Digital initiatives have been termed truly successful.

Our observation is that leadership focus in many cases revolves around finding an IoT/ Industry 4.0 platform with the assumption that the rest will happen on its own. It is surprising. Organizations get locked up with costly platform licenses and effort then becomes to make use of them somehow. Industry 4.0 needs to be imagined and understood much more holistically and strategically.

A blurred definition of the purpose of Industry 4.0 will result in a lack of direction and enthusiasm. Research has shown that while Efficiency is an important purpose in some regions, Customer Experience is a dominant purpose in other regions. We have an interesting example in which the COO of an Indian conglomerate mentioned that his production floor must be digitally attractive to new generation employees who come with strong smartphone affinity and would expect a similar experience when they deal with production equipments. And, it was one of his main purposes of Industry 4.0!

Treating Industry 4.0 as a classical IT project (say, an ERP rollout) is another error. It is much more exploratory in nature with multiple manifestations on the way. It needs more active people participation. It needs a Super Agile project methodology. Hence, it cannot be driven by a top-down instruction-led approach with a rigid plan.

Digital is relatively new. Trying to “do-it-myself” is a big mistake. You need leadership involvement, your people need to be onboarded and many tech and organization choices are to be made. You may not know many things; be humble and learn from your partners, suppliers, customers, and competitors. 

Could you please explain how does a Frugal Digital approach help businesses in maximizing their digital investments?

Frugal Digital is a philosophy and an approach, especially when an organization is faced with constraints and when it wants to de/re-prioritize Digital initiatives. Even otherwise, it gives a reference framework to ensure that you are maximizing your Digital investments.

It has three dimensions. One, Purpose / Repurpose. It’s about re-discovering the very purpose of your Digital journey and if there is any change. Two, is about being creative to continue the Spirit of transformation. Often it’s about continuing the Change that you have embarked upon and communicating with your team despite lowered budgets in circumstances like today. And three, use Bosch Digital-Lean approach to drive bottom-up improvements blended with top-down prioritization to create a ‘process-automation-digitalization’ journey.

Bottom-up process primarily refers to Value Stream Analysis of the existing value stream to search for improvements identifying digital interventions which leads to future Value Stream Design. On the top-down process, for example, it gives strategic direction on Operating Cost or Customer Feedback. It may also explore how IoT and AI can redesign the business model and value proposition. Frugal Digital also provides a ready-reckoner of global best practices and key considerations to facilitate decisions and choices.

How do you view Indian businesses in terms of their Digital and Industry 4.0 maturity? 

While the digital maturity of Indian businesses lags behind its peers in the developed economies, India’s Smart Manufacturing market will grow at double-digit and its share in the global market will grow from the current share of 2.6% to 3.3% by 2025, according to a recent research report. Govt. of India’s ambition to increase the contribution of Manufacturing from the current 17% to 25% of the GDP will drive more Digitalization of Manufacturing and Logistics segments.

Having said that, let us remind ourselves that two of the 70 global Lighthouse Factories recognized by the World Economic Forum for their Industry 4.0 leadership are in India - Tata Steel. Various Indian companies are spearheading Industry 4.0 initiatives from advanced automation to innovative Digital use cases.

In general, many organizations in India are implementing more matured Manufacturing Execution Systems to lay a sound foundation for more Digital use cases in the coming years. Organizations are also convinced about advanced automation and robotics to drastically improve efficiency and productivity in manufacturing, warehousing and intralogistics areas and build rich data repositories. In fact, there are dedicated efforts to ensure process and machine connectivity for seamless data collection and transfer. Many AI use cases are employed in Process Quality, Equipment and Asset Maintenance, Logistics and Energy areas. We are also seeing an uptick in Image/Video analytics-based use cases for Visual Inspection for Quality, Inventory, Asset Performance and Safety. Given the current concerns on the business environment and the evolving regulatory framework, Digital sustainability initiatives will step up in the coming years.