1. Industry 4.0 Digital Operations Survey 2016
Industry 4.0 Digital Operations Survey 2016
South Africa Country Report
April 2016
Front cover slide with activated logo

2. Flexibility and complexity Beginning of 20th century
The forth industrial revolution has started, creating the Digital Enterprise
2015+
Flexibility and complexity
1970th
Beginning of 20th century
End of 18th century
Industry 4.0
Digitisation and Integration of Value Chains and Products/ Services (Internet of Things/Services)
New Digital Business models
Integrated Data Analytics as core capability
Digital Enterprise
Industry 3.0
Automation and robotic
Industry 2.0
Mass production and assembly lines
Industry 1.0
Steam engine manufacturing
1800
1900
2000
2014
2020
Industry 4.0 Digital Operations Survey 2016
April 2016

3. Defining Industry 4.0 – the fourth industrial revolution
Industry 4.0 focuses on the end-to-end digitisation of all physical assets and processes as well as integration into digital ecosystems with value chain partners. Data & Analytics is a core capability for Industry 4.0.
Industry 4.0 applications are fuelled by key enabling technologies.
Please explain:
Other related terms include the ‘Industrial Internet’´ or the ‘Digital Factory’, although neither takes as complete a view.
1) Digitisation and integration of vertical and horizontal value chains
Industry 4.0 digitises and integrates processes vertically across the entire organisation, from product development and purchasing, through manufacturing, logistics and service. All data about operations processes, process efficiency and quality management, as well as operations planning are available real-time, supported by augmented reality and optimise in an integrated network.
Horizontal integration stretches beyond the internal operations from suppliers to customers and all key value chain partners. It includes technologies from track and trace devices to real-time integrated planning.
2) Digitisation of product and service offerings
Digitisation of products includes the expansion of existing products, e.g. by adding smart sensors or communication devices that can be used with data analytics tools, as well as the creation of new digitised products which focus on completely integrated solutions. By integrating new methods of data collection and analysis, companies are able to generate data on product use and refine products to meet the increasing needs of end-customers.
3) Digital business models and customer access
Leading industrial companies also expand their offering by providing disruptive digital solutions such as complete, data-driven services and integrated platform solutions. Disruptive digital business models are often focused on generating additional digital revenues and optimising customer interaction and access. Digital products and services frequently look to serve customers with complete solutions in a distinct digital ecosystem.
Data & Analytics as core capability
Data lies at the heart of the fourth industrial revolution, but the massively growing information flow brings little value without the right analytics techniques. The rapidly growing number of sensors, embedded systems and connected devices as well as the increasing horizontal and vertical networking of value chains result in a huge continuous data flow.
Data is coming from multiple sources, in different formats, and there is a need to combine internal data with data from outside sources. Expert and effective data analytics is essential to using data to create value. And with so many points of entry, companies need to take a rigorous, pro-active approach to data security and related issues and work to build digital trust.
Industry 4.0 Digital Operations Survey 2016
April 2016

4. IOT In Action – Rolls Royce Example
Industry 4.0 Digital Operations Survey 2016
April 2016

5. 2,000+ companies from 26 countries in 9 industry sectors PwC’s 2016 Global Industry 4.0 Survey of industrial products companies is the biggest survey of its kind in studies of Industry 4.0 to date.
Industry split
Participating countries
Please explain:
This is the biggest survey on Industry 4.0 to date. Countries such as Japan and China, India, Australia and Middle East, South Africa, US, Brazil, Canada and Mexico and European countries like the UK, Sweden, Finnland, Denmark, Poland, Italy, France, the Netherlands Switzerland and Austria have been surveyed.
It gives a a very good overview of digitization in all regions of the world. We were able to compare emerging markets with industrial countries and see regional differences.
What we saw in our survey, is that Industry 4.0 is a truely global prject now, and companies all over the world are investing and working towards making it happen now.
Methodology:
Based on research conducted between November 2015 and January 2016 with over 2,000 senior executives from industrial products companies in 26 countries. The majority of participants were Chief Digital Officers or other senior executives with top-level responsibility in their company for Industry 4.0 strategy and activity.
Results were weighted by country GDP to provide a balanced view in global.
Industry 4.0 Digital Operations Survey 2016
April 2016

6. Sample: Industries and Sample Sizes
Industry 4.0 – Digital Operations Survey 2016
Total sample size
61 companies
Number of companies surveyed
Aerospace, Defence & Security
Chemicals, Process Industry
Engineering, Construction
Forest, Paper & Packaging
Metals & Mining
Industrial Manufacturing
Transport & Logistics
Electronics
Automotive
Other
...
Question: Which sector best represents your company?
Industry 4.0 Digital Operations Survey 2016
April 2016

7. Digitisation in South Africa Status Quo and Future Potential1
Industry 4.0 Digital Operations Survey 2016
April 2016

8. Digitisation Pioneers in South Africa
Industry decision makers expect overall surge in digital operations – from Hype to Action
27%
64%
Status quo
In 5 years
Shown: Summarised percentage of companies surveyed reporting high degrees of digitisation (average of at least 3,5 on a scale of 1 “very low” to 5 “very advanced”)
Questions: How would you classify the current level of digitisation and integration in the following areas in your company? // What levels of digitisation and integration are you expecting in the next five years?
Industry 4.0 Digital Operations Survey 2016
April 2016

9. Launching Promising Digital Products & Services
Nine out of ten companies plan to expand their digital portfolio
87%
Total percentage of companies planning to introduce at least one of the
presented digital products and services
Introducing a new digital
product portfolio
Digitisation of the existing
Big data analytics services
to external customers
Other digital services
Note: Multiple answers possible, figures in percent
Question: Which of the following new digital products or services do you plan to introduce and expect will generate more than 10% of your future revenue over the next five years? Please select all that apply.
Industry 4.0 Digital Operations Survey 2016
April 2016

10. Industry 4.0: Benefits Over the Next 5 Years I
In addition to substantially improved efficiency and costs, most decision makers expect double digit revenue gains
Efficiency gains
(figures in %)
Lower costs
(figures in %)
Additional revenue
(figures in %)
more than 50%
31 – 50%
21 – 30%
11 – 20%
1 – 10% 0%
Expected benefits
>10%: 71
>10%: 73
>10%: 70
Note: Figures in percent
Question: What cumulated benefits from digitisation do you expect in the next 5 years?
Industry 4.0 Digital Operations Survey 2016
April 2016

11. Investments in Industry 4.0 Applications
Further increase in addition to already high level of investments
5,2%
6,8%
more than
10%
>10
40%
48% 10 9 8 7
25%
29% 6 5 4 3
37%
26% 2 1 0%
Investments in %
of annual revenues
In the last 2 years
In the next 5 years
Note: The yellow boxes show average investments (median value)
Question: How high are your company’s current and future investments in digital operations solutions?
Industry 4.0 Digital Operations Survey 2016
April 2016

12. Industry 4.0 Investments: Expected ROI Period
Three out of four companies anticipate up to two years until amortisation
74% within 2 years 8%
26%
40%
26% 0%
less than
6 months
6 months to 1 year
1 to 2 years
2 to 5 years
more than 5 years
Question: Which return on investment period (ROI) do you expect from your digital investments?
Industry 4.0 Digital Operations Survey 2016
April 2016

13. Challenges for Building Digital Operations Capabilities
Establishing digital culture among greatest challenges in South Africa
Global Top 3
Lack of digital culture and training
Insufficient talent
High financial investment requirements
Unclear economic benefit
of digital investments
Lack of a clear digital operations vision and support / leadership from top management
Slow expansion of basic
infrastructure technologies
Business partners are not able to
collaborate around digital solutions
Unresolved questions around data security and data privacy with external data
Lack of digital standards, norms
and certification
Concerns around loss of control over your company's intellectual property
Note: Up to three mentions possible; figures in percent
Question: Where are the biggest challenges or inhibitors for building digital operations capabilities in your company?
Industry 4.0 Digital Operations Survey 2016
April 2016

14. Data Security Concerns
No. 1 risk: hacker attacks
Global Top 3
Operational disruption due to cybersecurity breaches (hacking)
Unauthorised data extraction/modification within company-internal data flow
Damage to company reputation and
loss of trust due to data loss
Liability risks through data loss
Loss of intellectual property
Misuse of data during exchange
of information with partners
Violation of regulations and laws on
data security or data privacy
Endangerment of operators or users
Note: Up to three mentions possible; figures in percent
Question: What are your main concerns in terms of data security?
Industry 4.0 Digital Operations Survey 2016
April 2016

15. Digital Operations: Competitor Comparison
Two out of five decision makers consider their companies to be cutting edge
21%
42% 4%
18%
37%
28%
14%
Compared to main competitors deciders see own company as...
very behind
same level
very advanced
behind
advanced
Question: How advanced is your company in terms of building digital operations capabilities compared to your main competitors?
Industry 4.0 Digital Operations Survey 2016
April 2016

16. Benefits and Challenges of Big Data Analytics2
Industry 4.0 Digital Operations Survey 2016
April 2016

17. Significance of Data-Driven Decision Making
Big data offers substantial potential for growth in South Africa
60%
83%
Status quo
High significance
In 5 years
High significance
Shown: Percentage of companies surveyed reporting high significance (4 or 5 on a scale of 1 “very low” to 5 “very high”)
Question: What significance does the gathering, analysis and utilisation of data for decision making have for your company?
Industry 4.0 Digital Operations Survey 2016
April 2016

18. Data Analytics: Areas of Application (Status Quo)
Big data methods most often utilised for manufacturing and operations planning purposes
Global Top 3
Optimisation of overall business
planning and controlling
Better manufacturing / operations planning
Improvement of customer relationship and intelligence along the product life cycle
Increase of sales revenue
More efficient asset utilisation or
operational efficiency
Development of new or optimisation of
existing products / services
Improved product or process quality
Efficient maintenance / service of own assets
or customer products
Better cooperation and decision making
with partner companies
Optimisation of transport and logistics
cost / efficiency
Note: Figures in percent
Questions: In which areas are you using big data analytics today? // In which additional areas will your company use data analytics in five years?
Industry 4.0 Digital Operations Survey 2016
April 2016

19. Data Analytics: Areas with Potential for Growth
Decision makers expect substantial gains—especially with sales revenue
Optimisation of overall business
planning and controlling
Better manufacturing / operations planning
Improvement of customer relationship and intelligence along the product life cycle
Increase of sales revenue
More efficient asset utilisation or
operational efficiency
Development of new or optimisation of
existing products / services
Improved product or process quality
Efficient maintenance / service of own assets
or customer products
Better cooperation and decision making
with partner companies
Optimisation of transport and logistics
cost / efficiency
Note: Figures in percent
Questions: In which areas are you using big data analytics today? // In which additional areas will your company use data analytics in five years?
Industry 4.0 Digital Operations Survey 2016
April 2016

20. Data Analytics: Biggest Challenges
Decision makers mainly address skill challenges
Global Top 3
Lack of skills and competencies in
your company's workforce
Lack of analytical methods or
algorithms to be applied
Lack of opportunities to use big data analytics to your company's benefit
Poor existing data quality
Poor access to relevant operations data
Lack of Top Management support
or willingness to invest
Inability to divide irrelevant from relevant data in the data collection process
Uncertainty regarding data property
or data security
Uncertainty whether or to what extent
data privacy laws allow analysis
Note: Figures in percent
Question: Where are the biggest challenges in regards to the utilisation of data analytics?
Industry 4.0 Digital Operations Survey 2016
April 2016

21. 3 Where to from here? Industry 4.0 Digital Operations Survey 2016
April 2016

22. It requires you to think and act digital…
One strategy
Fail Fast
Customer or client first
Agility
Collaboration
3rd party integration
Industry 4.0 Digital Operations Survey 2016
April 2016

23. Next actions and steps to consider….
Digital fitness self assessment and app
Discussion and insight on the feedback with PwC
Competitor assessment
What are they doing?
Board alignment session (Catalyst)
Get everyone on the same page
Detailed Industry 4.0 maturity assessment
Define your digital strategy and roadmap
Business case and roadmap
Industry 4.0 Digital Operations Survey 2016
April 2016

24. Your questions?

25. You are the leaders of the Fourth Industrial Revolution!
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