Want to rock Industry 4.0? These 6 challenges are in your way.
What to look out for to successfully avoid the pitfalls of digital transformation
The 6 big challenges
Industry 4.0 and digitalization can add tremendous value to an organization.
So, why is adoption in the industry still hesitant?
I looked across a wealth of studies and talked to industry experts to figure out what headwinds can be expected when going into Industry 4.0.
I consolidated the reasons in 6 groups and give a quick recommendation what to look out for — as IoT solution supplier and manufacturer looking to upgrade production:
- OT and IT
- Infrastructure
- Security
- Competence
- Data Ownership
- Change Management
1. OT and IT
The different departments in manufacturing are operational technology (OT) and information technology (IT). For digital transformation, the OT/IT convergence describes how the departments are integrating for Industry 4.0 success.
Today, OT and IT have different responsibilities and are typically strictly separated.
Operational Technology:
- Manufacturing execution system
- Automation and PLC administration
Information Technology:
- Computer and Server Administration
- Network Security Administration
With the introduction of Industry 4.0 manufacturing assets are to be connected to the local network and internet. This calls for joint responsibility of the formerly segregated departments.
The challenge is to reach consensus in the different inherent philosophies:
- OT is open to new technology which brings value to production and is easy to handle
- IT is open to XaaS pricing models but is very careful to avoid data leaks
To get initiatives going, both need to see value
What do we need to consider?
→ For suppliers: Be sure you understand the challenges of both departments and have a clear pitch on how to bring value to them
→ For manufacturers: As the two departments are probably separated, build a cross departmental task force to collaborate on a use case in production
2. Infrastructure
The connection of assets and sensors leads to high data volume. But typically the legacy low bandwidth connections are not suited. The most probably need to be enhanced to achieve:
- Stability & reliability
- Low cost of maintaining and administrating
- Standards in m2m communication
What do we need to consider?
→ As supplier: Maximize compatibility of your product with the biggest standards and ecosystems. Or build a new standard/ecosystem to lock in customers. Either alone or — more probably — with partners.
→ As manufacturer: When getting started with basic use cases, select a supplier who can deliver the solution and competence to get/keep it running. Also you will want to use them to build up internal competence. In more complicated manufacturing scenarios you will need dedicated experts to bring the puzzle together.
3. Security concerns
The collected data and created information need to be secure in transportation and storage. Some information could contain production knowledge, production numbers, quality data, or details about employees.
The typical concerns regarding security are:
- Data can be confidential, a misuse of data can lead to business damages.
- Inbound connections have the risk of compromising production.
What do we need to consider?
→ As supplier: Be sure you know your target audience, the sensitive nature of data, as well as their goals in security. This allows you to offer different solutions to match and upsell the customer.
→ As manufacturer: Keep your software and infrastructure up to date. You will also benefit from making cybersecurity high priority. This can be done by employing a dedicated data / cyber security officer.
4. Low expertise
With new technologies being used in Industry 4.0, new skills are suddenly needed in the organization.
Today, small and medium sized companies typically have experts in mechanics, electronics, and control software. But not in analytics and data and communication technology.
For suppliers and manufacturers that implies:
- A need to partner and use new suppliers
- Targeted talent acquisition
What do we need to consider?
→ For suppliers as well as manufacturers: New skills are needed in communication technology and data science. Because talent is scarce, many companies look to build up internal resources.
5. Data ownership
Data is a strange good — it is intangible and duplicatable while it is potentially valuable and can be confidential.
Because of the fluid nature of data, it is hard to determine who actually “owns” it. (And what “owning” actually means)
So before entering any agreements with customers, partners or suppliers, take the time to clarify the following:
- Which data are we talking about?
- Where is the data created and through which process or mechanism?
- Which data should stay confidential to one of the parties?
- Who has the right to handle and use the data to generate value?
- What is the respective party allowed to do with the data or information?
- How is the transportation and storage secured?
- Who covers for damages from data leaks or misuse?
What do we need to consider?
→ Draft up a data policy which considers the interest of all parties involved
→ Some regions like China or Europe have special regulations. For example the new EU GDPR regulation.
6. Change management
The shift towards Industry 4.0 means changes for suppliers and manufacturers. And this “digital transformation” needs to be supported by change management.
Because many departments are covered, also many stakeholders are involved. This is a situation which requires tact, empathy and a visionary leader.
Otherwise the digitization is under the risk to fail, resulting in wasted money and lost time.
What do we need to consider?
→ Make use of traditional change management methods to develop the organization
→ Be sure to polish up on office politics to get key stakeholders on board
Some resources I can recommend if you are interested in taking the next steps:
Daniel Sontag connects the bots: As Industry 4.0 lead and manager for connected products, he does what he loves — tying business to tech, and theory to practice.
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